CEO Michael Carrel and CFO Angela Wirick. We're gonna do a 30-minute fireside chat. Thanks everyone for joining us. I guess Mike, Angie, you know, starting out at a high level on the 2026 guide and some of the growth drivers in the business, you know, you delivered 15% revenue growth in 2025. You're guiding the 12%-14% in 2026. You know, as a management team, you've consistently met or exceeded your guidance.
How should investors think about the setup for the year? What's giving you confidence in the range? Do you feel there's an appropriate level of conservatism baked in given kind of the macro environment?
I'm gonna start with your last question first. Yes, think there's appropriate conservatism. Our philosophy, you know, and we've said this many times, is we wanna put guidance out there that we feel really comfortable not just being able to meet, but that there's a pathway to beat. When I look at the setup for 2026, you know, I'd say the big thing that we say is innovation is really driving revenue growth in 2026. Continuation of a lot of the product launches that we started in 2025. In our pain management business, the cryoSPHERE MAX probe.
In our appendage management business, we have two product launches, the FLEX-Mini and the PRO-Mini. Those both give us a shot on goal. I think in each one of these new product launches, you are talking about driving both growth and v olume, but then also pricing uplift because there's new innovation built into the devices.
Even though it's not a new product launch, I don't think I can say EnCompass is a new product launch at this point in time, but we were also still very bullish on what we're seeing within the open ablation landscape and EnCompass continuing to drive growth.
Got it. Pain management has been one of the growth drivers for consecutive years now.
Yep.
You know, Max has been the core driver, but you recently launched cryoXT for lower extremities. You know, how should we think about the impact of cryoXT on the franchise's growth profile going forward, whether that be in 2027 or in the second half of 2026?
Yeah, I think with cryoXT, so the device specific to the amputations market, we launched soft launch at the very end of 2025 and have kind of started full launch at this point in time. You know, from a guidance perspective, we said expected to contribute more fulsome in the back half of 2026 as we're exiting the year, just giving us time with the new therapy and market development. That takes some time to get up and going.
You know, I think the way that you think about cryoXT in the context of our pain management franchise growth is while you start to hit kind of bigger numbers, law of large numbers start to apply in the base area of the business, thoracic and sternotomy, this is another driver for us. This is another way to augment and keep that pain management business at a very high growth rate.
Got it. You know, in terms of the other franchises, you know, open ablation, appendage management have been kind of the durable core of the business. You know, EnCompass has been a big driver of that, you know, but you said it's not a new product launch anymore, but it's still driving growth. How should investors think about how much runway is left in the adoption curve there?
I think there's an incredible runway. I think even within AFib patients, you're talking about the vast majority still don't get treated today. EnCompass helps us unlock that there's a reason for you to ablate the patient to manage their appendage. The pathway to being able to do that is the EnCompass device.
If you think about the data and numbers, there's two million patients that have a cardiac surgery every year, and last year just over 100,000 were treated with some sort of device from AtriCure. You've got a long runway with the trials that we're running that are very differentiated on that, on that standpoint. EnCompass is what enables that. We took a procedure that was 40 minutes down to less than 10 minutes. We, you know, operationalized it for those surgeons.
We made it really an approachable area. There's a ton of runway. While it's not new, in many ways it's new to the surgeons that we're introducing it to because they weren't doing any treatment before.
Got it. You know, kind of moving from top line drivers to profitability and margins, which has been, you know, a really good story for AtriCure as of late. You know, you doubled Adjusted EBITDA nearly in 2025. You're guiding $80 million-$82 million in 2026. Seems like kind of ahead of the curve on the LRP you gave in March. Thinking about that, is it possible we could see that 20%+ EBITDA margin before the 2023 target?
Yeah, I think it's very real given the trajectory that we're on. You know, again, no differently from our top line philosophy, when we guide on the bottom line, we want to make sure that we can deliver the number and a pathway to a beat. You've seen improvements to profitability that I think that have exceeded our own expectations. I think what's so compelling about our story is that we're doing that while still making pretty big investments in landmark clinical trials, things that we expect to be growth drivers for the business longer term.
Got it. You had your first quarter of positive GAAP net income in the fourth quarter of 2025.
Yeah.
You're guiding the full year positive GAAP net income in 2026. You know, as AtriCure crosses that profitability threshold, how should we think about the financial story of the company evolving? Is there any change in kind of your view of the company as a growth company, or is it still kind of steady eddy that way?
Yeah. I think we are investing for growth. You know, primary focus for us, the capital allocation one, two, and three are focused very much on organic development of activities that we think are gonna be long-term growth drivers. I mean, we want to continue our path on profitability to show that we're good stewards of, you know, the investments that we're making. I think it just tells you between the markets that we're in, very consistent double-digit revenue growth and high gross margins.
Given the investments that we've made in the company, we have the ability to be very, very profitable as a business long term, but still focused very much though on investing for growth.
Alongside that profitability, you're turning into cash flow positivity as well. You talk about capital allocation obviously being growth, growth, but as you move into that positive free cash flow, you know, phase, is there any room for a formal return of capital program? Is that something you've considered?
In the near term, no.
Okay. You know, you also got a new manufacturing facility coming online in the second half of the year. You called that out as a modest gross margin headwind. You know, how long should we think about that absorption period lasting? When does it move from maybe a structural headwind to a tailwind?
Yeah. I think you're talking near term, you know, within the next year. It's a bit of a headwind from a gross margin perspective. We will start manufacturing in that building much later this year. We'll open it up, start to bear the burden of the facility. Once you get operational, I think that this is something that will ultimately turn.
The vision behind the expanded manufacturing capacity very much dovetails into what we presented at our investor day a year ago, which was we expect to be able to hit $1 billion in revenue, you know, as we exit this decade. We felt very good about line of sight and the drivers that we have within the business to be able to do that. We wanna make sure that we were investing to support that growth. This manufacturing expansion helps us do just that.
Got it. kind of moving to the competitive landscape, which has been a very hot topic for AtriCure over the recent years. You know, Penditure was an overhang on the stock for about a year, but it seems like you've kind of weathered that storm and come out on the other side maybe stronger in some regards. you know, what drove that outcome and your ability to weather that with a scaled player entering the market? How do you think that displays the moat you've built around AtriClip, and the clinical data you've made?
I think first is just our view on competition is that if a market has big competitors coming into your space, that means it's a really big space and probably a lot bigger than where you are. I think it's a recognition of the investments that we've made over the last 10+ years. People now see because of our success, they're looking to kind of follow us into that space, especially coming from those big players. I think that is a compliment to us in terms of the work that we've done on that front.
Every other time a second and third competitor come into the space, the overall market has grown because you've now got more people talking about it and generating data and generating conversations with surgeons in our case. You saw that in TAVR. You saw that in the left atrial appendage space. In particular, both of those accelerated when they saw competition coming in. We view competition in a very positive way.
Even though obviously you've got to detail it out and you want to win in the, in the field, we do view it overall as positive. Getting to the specifics of why do we think that we win and why have we won in that space is because we've never stopped investing in the core principles of our company, and those are really three core principles. Number one is innovation.
If you look at what we've done on the AtriClip side of things, we went from the original product to a V-Clip product, which is what everybody's trying to copy now, to a Mini product, which is 60% smaller than any product on the market today, even our own. We're now coming out with a new one coming next year. What customers recognize from us is the quality of that product, the innovation that comes into it, is that we're meeting their needs and that we're listening to them. We've got great products.
They're smaller. They're safer. All you have to do is, you know, go out there and you can look. We actually have no events with this product. I mean, it's like 0.001% event rate with it. It is an incredibly safe product. You combine the innovation with the safety and quality we have, you add to that the fact that we make investments in clinical evidence. We believe that innovation's great, without clinical evidence, you can't really create that full moat that you're talking about.
All the clinical evidence that has been generated over the last 10 years is with our product. We have over 21,000 patients that have been studied, over 100 peer-reviewed papers, many randomized controlled trials, and we've got LeAAPS coming down the pathway, which is the largest cardiac surgery trial ever done. You invest in innovation, put clinical evidence behind that that's very specific to your product and the performance of your product versus anybody else.
People recognize this is what we do and what we know, which leads you to the third thing and the third pillar of what we build, which is education and training and awareness. Our teams understand this space better than anybody else. They've got great relationships. They're in the cases, and this is what we do every day. We're super focused on atrial fibrillation and the left atrial appendage.
T hat's what we do incredibly well. We've got a whole team of people that talk about it, think about it, study it every single day, and we're recognized as a result by the physicians as being that way. Not just by physicians, but by hospitals as well. We've helped them get reimbursement. We've helped them get the guidelines to change. You combine all those things, that's why we win.
It's not like any one thing that allows us to win. At the end of the day, the best product wins. We've got the best product on the market, and we believe that with the new competition, we'll still have the best product.
You said that, you know, competitors are trying to copy the V-Clip , but you're already one generation working on two generations ahead of that.
Correct.
In a way, that kind of emboldens your moat even more.
Yes.
Obviously kind of the 100 million-pound elephant in the room, Edwards announced that they're gonna be entering the appendage management market. When you think about kind of the markets Edwards addresses, you know, does that threaten a meaningful portion of your revenue? How should you think about the impact of Edwards entering the market? How do you think your experience with Penditure influences your ability to kind of continue to maintain that moat that you talked about?
Let's start first. The fact that Edwards is interested in our, in our market or the market that we're in, that we've been focused on for the last 10+ years, we take it as a compliment. They think this market is that big. To us, we think it's gonna elevate everybody in the space, that they're actually getting into the space. We welcome them with open arms, we'll compete with them on a day-to-day basis.
You know, how do we think we can compete with them is that that focus I talked about before, the continued innovation, we know we're gonna have better products. We believe that our products are incredibly differentiated, that they're chasing old products when they're coming out with their new product when they come to market. They're not gonna have the level of data or evidence in that area. For Edwards in particular, great company.
I mean, obviously, they've done wonderful things to build markets over many years, and we've got a ton of respect for what they do on that front. They just don't know this space nearly as well as we do. As they enter into it. Most of the procedures they are going to be involved with, they're a valve company, that they're adding this to the valvular procedures, and they've been very open about that. 2/3 of all patients that go into cardiac surgery are coronary bypass patients. We are in there for the ablation and the AtriClip, not just the AtriClip.
We're in the CABG procedures, so there's not as much of an exposure on that front. When you add in the valve side, they're going to do an ablation on those patients as well. We're in there with them, and we have a huge sales force that's well-trained on that front. I think we're well-positioned on that front. We're not taking it lightly. We know they're going to be coming into the market. I think we're all waiting for what does that product look like and how are they going to compete with us on that front, but we're going to be ready. Again, we welcome them.
You talk about the limited exposure on the CABG side. What can you do to accelerate and kind of deepen your position in that portion of the business?
I think you're seeing it. I talked about number one is the LeAAPS trial, which is a trial we started well before we knew this competition was coming into the space, is that upon we invested in it, we're fully enrolled in it. We will be the only company with a stroke label that is very specific to our product. That is a global positioning that we've basically done. It was a global trial that we did for that.
Number two is we invested in BoxX-NoAF, which is the prophylactic treatment of that patient so that you're basically reducing anybody's chance of getting AFib both post-operatively and in their lifetime. An AtriClip is in every one of those as well. You're adding an ablation tool plus the AtriClip. I think that puts us in a great position overall from creating that moat that you talked about.
Got it. We've touched on this a lot so far. Your clinical trials, just something AtriCure has been heavily investing in and kind of a leader in the space. You know, I think you talked about roughly 2/3 of cardiac surgery patients don't present with AFib, you know, but a significant portion will develop it post-operatively. When you think about the BoxX-NoAF trials and LeAAPS, you know, like you said, you touched on this, but like at a high level, what do these trials mean for AtriCure as a whole?
They're game-changing. Think about it. Our vision is that every patient that enters the operating room for cardiac surgery has an ablation plus an AtriClip on them. Maybe they also get a sternotomy nerve block on it if they're going in for a sternotomy. We think that we're there. We understand ablation and the AFib incredibly well. Our products are the only ones used in these trials. They're very specific in terms of what will actually work on that patient population.
They're very large randomized controlled trials. We think it changes the game. It takes it from 100,000 patients getting treated every year to hopefully two million at some point in time. Not obviously overnight, but I mean, obviously that's the big patient population. What you do know in cardiac surgery is there are two million patients that undergo cardiac surgery every year.
If we can prove that almost every one of them will benefit from an ablation with our technology, our EnCompass Clamp and the AtriClip, that is a huge benefit for AtriCure overall. Quite frankly, at the end of the day, for the patients.
Yep. If we fast forward and both trials read out positively, obviously there's kind of a lag for guidelines to update. You kind of touched on this a second ago, how should we think about the impact on your addressable market and the kind of commercial investments and infrastructure upgrades that might be necessary to kind of facilitate ramping that growth?
Yeah. I think when you get positive data, there should be a bit of a bump in terms of the revenue boost here. I think definitively once you have the label, you've gone through the full PMA processing, you've got an approval, that gives our team the license to hunt.
They're able to go out and really market to this. I think the good news is this is an existing customer with an existing sales force that we will, of course, look to see where we need to augment in territory sizes that maybe make sense upon the launch to split here. This isn't training a new surgeon. This isn't a new call point for us. This is an existing market. They're using the devices. They're just saying, look, rather than looking only for patients with AFib to treat, I'm going to treat every patient effectively that's on my operating table.
LeAAPS also recently hit the 50% event rate. What does that mean for the trial exactly? How should we think about the path to a readout from here?
What it does, I mean, the events are accumulating at a reasonably fast pace. You've got a five-year follow-up from the end of enrollment, which takes you into 2030. Since we've already hit 50%, that likely tells you we're probably going to be earlier than 2030.
It's tough to predict exactly because you get waves of the events that come in, but we have to hit 469 events in total. Again, like you said, we're over 50%. We'll just keep marching towards that full piece. It's kind of a wait-and-see game at this point in time. It will be before 2030. I just don't know how much earlier.
Got it. BoxX-NoAF, almost one year ahead of schedule, I believe. Can you walk us through the timeline from enrollment completion, data adjudication, presentation, and then eventual PMA submission, and any conference you're targeting for presenting that data?
Yeah. We will expect to complete enrollment around the end of 2026. The first follow-up, so the first primary endpoint was 30 days post-procedure. Relatively short timeframe after you've completed enrollment, we'll go through the data adjudication process. We are targeting a surgical conference early in 2027. I think logically AATS is probably the right one to think about, but depends on pace of enrollment and when we finalize. Typically working through FDA process is around a 12-month timeframe.
You're talking about positive data, we believe, early in 2027, and then approval in early 2028. The nice thing about this trial is it doesn't just end there. I mean, that gives us a chance to win in a very short timeframe. We will follow these same patients for a three-year timeline to see what happens to their clinical AF burden, and then go back to the FDA upon, again, positive results. Later at the end of this decade, have another chance of enhancing the label further.
I want to touch something you said earlier about the label being exclusive for AtriCure. If these trials are successful and you do have the label expansion. That would be exclusively for your products. That would not be something that would be, you know, a rising tide raises all boats.
Correct. I mean, they have a 510(k), they can sell their products, but they can't make the claims that we're making relative to this, relative to stroke, reduction in post-op AFib, and reduction in clinical AFib.
Got it. You know, you have a good slide in your investor deck where you show the progression of guidelines for your treatments over time. You know, guidelines have been a tailwind for the business. They've been consistent and upgraded. You know, most recently had some STS, you know, postoperative AFib quality metric updates come out.
That goes into effect in 2027, I believe. You know, today only, you know, 35% of cardiac surgery AFib patients actually end up getting treated. How should we think about that number increasing over the next couple of years, and how should we think about the commercial tailwind to AtriCure from that?
I think that combined with BoxX-NoAF is going to improve adoption quite dramatically. What that means is that the surgeon is going to be effectively required to do an ablation on the patients that have atrial fibrillation. As you said, it's only at 35% today. This is the society's way of saying, "Okay, we gave you guidelines that said you should treat.
Now we're going to put some teeth behind that, and we're going to tell you that not only are there guidelines, we're going to actually make it part of your metrics, that your hospital will be dinged if you don't ablate or treat enough patients." The reason they're doing that is because they know that if you treat that patient, that patient does better, and that's why they're doing it. I think that that's going to have a big boon to our business.
Likely, obviously, sometime at the end of next year, you might see some kind of effect of that. Around the same time, the BOX-X is gonna basically hopefully have some data out as well. I think that that's a big positive. As Angie said, we think the combination of that probably helps the growth rate in that part of the business.
Got it. You mentioned the, you know, star ratings. Is there a commercial playbook you're thinking of for how you can take most advantage of this? Any incremental investment? Were these guideline changes probably not incorporated in the LRP, so that's probably a positive, right?
Yeah, definitely a positive, I'd say, relative to the LRP. I think our team is always looking about the best way to have the, you know, to drive some of these initiatives beyond just the commercial team. Start to think about your reimbursement team, your marketing folks. How can you help further that message? You know, you've got kind of feet on the street, how does the company overall provide air coverage?
Thinking through what that looks like once the quality metrics are out there, and helping our accounts further understand how they can really take advantage of this and not be behind when this comes into play.
Got it. kind of switching gears to the franchises. Bringing pain management, which we talked about, has been kind of been a nice growth driver for you. you know, it's growing quickly, but without the benefit of reimbursement. How do you see the path to coverage? Is there a credible path to coverage? What would unlocking reimbursement, if that did happen, mean for the TAM and adoption curve?
Yeah. To unlock reimbursement, we need data. We're investing in a lot of individual site data, getting it published. The more and more that data gets published, that's what happened in cardiac surgery. You have something to compare to. In cardiac surgery, we saw the guidelines came out first. That was all from data we basically put together and we invested in. Those guideline changes then led to, four years later, reimbursement changes, which has obviously continued on, now leading to star ratings.
I think the same playbook is gonna happen within cryo, which is that we're investing in the data. Hopefully, that leads to guideline changes, which then lead to reimbursement. That would be a game changer in this space because that is one of the big pushbacks, is they're not getting paid for it, and the margins aren't nearly as good in thoracic surgery as they are in cardiac surgery.
Kind of building on that, you know, cryoXT is now launched. Kind of deliberate ramp. In terms of your accounts, like how many accounts are active? You know, what is the current physician feedback you're hearing? Does the amputation market have a meaningfully different adoption profile than thoracic?
Yeah. At this point, we're in about two dozen accounts. Every cryo rep that we have in the field was told, "Focus on one account only. Go really deep with your initial procedure. Make sure that it's well understood." About two dozen or so accounts, which we think is good progress to start the year at this point in time. You know, this is in the amputation space. This is the procedure itself. You know, the primary procedure of doing an amputation hasn't changed in a very long time. This is new technology into procedures that hasn't seen a lot of innovation.
I think beyond the excitement of, hey, there's something to be excited about, the feedback that the physicians can see, and the nice thing about our pain management business, as you know, is you can see that immediately post-procedure. You're not waiting for a year to see, okay, is the patient's AFib still a problem or not? You can see this immediately post-procedure. The feedback that we get from surgeons who have used the device, along with the care teams who are caring for the patients post-procedure, is exceptional.
They can see the benefit it has for the patients. I think longer term, no different from our other markets within Cryo Nerve Block, looking to surround this therapy with additional data, being able to market to not just postoperative pain, but the potential for could it help with phantom limb pain. Thinking really big on this opportunity here.
I think given it's a new therapy and a new call point for us in a new area that hasn't seen a lot of innovation, the ramp may be a little bit slower than we saw in our thoracic business, but it still keeps us very bullish that this is long-term a great growth opportunity for the company.
Okay. Talking about growth opportunities, cryoSPHERE MAX has been a nice growth driver. Now it's in roughly about 75% of your accounts. You know, when we think about pain management growth, is there an aspect where we start to get law of large numbers and we start to see growth slow a little bit? Do you think there's a way to kind of offset that with the cryoXT launch and, you know, a possible sternotomy expansion to extend the runway for that growth?
Yes, yes, and yes. I think that's what's happening today in the field. I think we're starting to see with sternotomy, the feedback that we got from surgeons was we can see that it works, but to add the time that the legacy device took to do the ablation, they said it's just too long. I think cryoSPHERE MAX gives us our chance, our team, to go back to those surgeons and say, "You believed in it.
You thought it had an impact, but we're talking about a significant reduction in time." Those have been sticky procedures, not the volume of growth, the volume of activity we do still is within the thoracic space. I think in this particular area, continuing to find ways where cryoablation, managing a patient's pain for nerves that are exposed in surgical procedures, I think we're gonna find multiple ways to continue to develop and cultivate new markets that help keep this as a high-growth driver.
Kind of turning to your leading franchise, appendage management, you talked about this earlier, the next generation AtriClip is coming in 2027. Can you talk about what that product is, you know, how it fits in the portfolio, and if it's addressing a different segment of the market that the current lineup doesn't?
Go for it.
Currently we've got the FLEX-Mini product in the market. That has taken over the market by storm. It is much smaller than anything else that's out there. Super easy to deploy, allows for great visualization, knowing that you're getting down to the base of the appendage. The new product that's coming out is gonna be a V-Clip version of that, so an open-ended version, so you can kind of place that.
Some people like that approach, that's the whole purpose behind it. One is to give that to surgeons who like the open-end versus the closed, and you've got a mix of surgeons on that front.
Number two is it also allows us on the minimally invasive side to get it down a smaller trocar, which is really important towards any type of procedure, whether it's a Hybrid procedure, but also towards minimally invasive cardiac surgery, mitral valve surgery, et cetera. Getting that visualization's really important, and that V-Clip I think is gonna make a big difference on that.
Okay. You just talked about Hybrid. You know, obviously another point of discussion about the company has been PFA and its impact on the ablation franchises. Obviously PFA has been a kind of hot topic in med tech as a whole. You recently committed or completed first-in-human treatments with your combo RF PFA EnCompass Clamp in December. You know, what does combining those modalities offer surgeons, and how should we think about the clinical trial path from here?
We believe it's incredibly differentiated technology that we have combining PFA plus RF because it actually hits at different mechanisms of action on the heart. You're gonna have a much more complete, much more durable procedure when you do that. It's gonna be on our EnCompass Clamp first, That's gonna enable for that really fast and efficient procedure. I told you before that to do the same level of ablations before, you had to do 30+ minutes. Most of that is not the ablation time, it's the access time.
That's why you were able to get down to less than 10 minutes. This will actually reduce the ablation times that were in there quite dramatically from three minutes or so of total ablation times down to well less than one minute. Just makes it easier for that surgeon to do it, and to make it more approachable from that standpoint.
You know, as PFA came out of the market, there was kind of a distraction from the MIS business. You know, as PFA has gotten more penetrated into the market, we're kind of hitting significantly higher levels of penetration than we saw maybe a year ago. You know, does that change your view? Is it a structural headwind, or is this something you still think is, you know, an opportunity to, as the market matures, for you to gain clarity and start to see a rebound in that business?
I think the where we sit today with our Hybrid business, we have incredibly compelling clinical data and outcomes when used on patients we know are unrivaled. You know, this is in longstanding persistent AFib patients, the CONVERGE procedure, a dual approach combining the best of surgery as well as what an EP is doing, we know is unrivaled for that patient set.
I think our, you know, belief that this could be a first-line therapy, you know, at this point in time, given the shift in this landscape to PFA, you know, this is probably not a first-line therapy. That being said, this is a good option for patients who have failed catheter ablation, something else has been tried, or, you know, there's a belief that they're just ready for the Convergent procedure out of the gate.
I just think this is a place where clinically we're still very relevant. There isn't another device that's been proven to help these patients in this way, so we look at this and say there's still an opportunity here. What we're looking for, very frankly, is within kind of the account landscape to see a little bit more consistency in that referral flow.
PFA has been a great technology for EPs and for that space, but coming to the realization of this may not be the best thing for every patient, and repeatedly doing a catheter ablation and moving on to a therapy that will help the patient, I think we look at that and say we're here to catch when that happens and believe that this is a very compelling clinical advantage, you know, that the company has.
You talk about CONVERGE, it takes multiple PFA catheter failures before an EP can refer for it. You know, what does it take to shorten that referral pathway? You know, is there anything you can do on the data or commercial side to accelerate that?
I think the biggest thing from that is, once you get somebody who starts to do patients with Convergent and they realize that I'm only gonna do one PFA and then refer them, I don't think you're gonna get it where it's gonna be first-line therapy. I think what you're gonna see is maybe after that one or that second one, then sites that are starting to see success with Convergent will then start to obviously do a little bit earlier after the first one. It's gonna have to be time on that front.
Got it. I think we're at time. Michael, Angela, thank you for joining us.
Thank you.
Thanks to everyone in the audience. Appreciate it.