AtriCure (ATRC) Q3 2025 Earnings Call Transcript

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Date

Wednesday, Oct. 29, 2025, at 4:30 p.m. ET

Call participants

• President and Chief Executive Officer — Michael H. Carrel
• Chief Financial Officer — Angela L. Wirick

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Takeaways

• Total revenue -- $134.3 million in worldwide revenue for Q3 2025, up 15.8% on a reported basis and 15.1% on a constant currency basis compared to Q3 2024, reflecting broad adoption across franchises and markets.
• Adjusted EBITDA -- $17.8 million in adjusted EBITDA for Q3 2025, roughly $10 million higher than Q3 2024, with the adjusted EBITDA margin reaching 13.3%.
• Cash generation -- $30.1 million net cash generated during Q3 2025, boosted by a $6 million one-time inflow from a sale-leaseback transaction.
• Gross margin -- 75.5% gross margin for Q3 2025, an improvement of 59 basis points from Q3 2024 due primarily to favorable product mix and contribution from new product launches.
• Operating expenses -- $101.1 million in operating expenses for Q3 2025, a 7.4% increase compared to Q3 2024 attributed to ongoing investment in research, development, and the transition between projects.
• U.S. revenue -- $109.3 million for Q3 2025, a 14.5% increase from Q3 2024, with open ablation product sales at $35.6 million (16.3% growth) and appendage management sales at $45.4 million (21.5% growth).
• Pain management franchise -- $20.8 million U.S. sales in Q3 2025, rising 27.7% year-over-year, driven by new launches of cryoSPHERE MAX and Plus probes.
• International revenue -- $25 million international revenue for Q3 2025, an increase of 22% as reported and 17.9% on a constant currency basis; European sales grew 24.2% to $15.2 million, while sales in Asia Pacific and other international markets grew 18.8% to $9.8 million from Q3 2024.
• Open ablation adoption -- 740 U.S. accounts purchased Encompass clamp through Q3 2025, exceeding full-year 2024 levels.
• Guidance raised -- Full-year 2025 revenue expected in the $532 million–$534 million range (14%-15% growth), adjusted EBITDA now projected at $55 million–$57 million for FY2025, and adjusted loss per share forecasted at $0.23 to $0.26 for FY2025.
• Product launches & approvals -- Notable contributions from AtriClip Flex Mini, Cryosphere Max, and Cryo XT devices; approval of Flex V ProV and Flex Mini in Japan.
• Clinical trial milestones -- Completed enrollment of over 6,500 patients for the LEAPS trial across 137 sites globally in early Q3 2025 and initiated first patient treatment in the BOX X NOAF trial.
• Minimally invasive ablation sales -- Segment reported a quarterly decline to $7.4 million, offset by strong growth in open ablation and other franchises.
• Research & development spend -- Up 9.2% in Q3 2025 compared to Q3 2024, reflecting planned investment cycling between project phases after completing LEAPS trial enrollment and new product launches.
• Appendage management penetration -- Less than 30% of U.S. sites currently utilize the Flex Mini device, indicating significant expansion potential.

Summary

Management signaled confidence in sustaining high-growth momentum, anchored by robust adoption of new products, ongoing clinical trial milestones, and operational efficiencies that expanded both revenue and adjusted EBITDA margins. Strategic product launches and new international approvals, along with accelerated clinical enrollment in major studies, position AtriCure (NASDAQ:ATRC) to further penetrate large under-addressed cardiac and pain management markets in 2026. Margin gains were attributed to favorable product mix, international distributor composition, and manufacturing efficiencies, while elevated research and development investment aims to support future growth catalysts across several franchises.

• Angela L. Wirick stated that SG&A expenses increased 6.8%, well below revenue growth for the quarter, demonstrating improved operating leverage as scale increases.
• Michael H. Carrel said, "We're still severely underpenetrated in the CABG market, and maybe approaching ten percent of CABG patients with afib are getting treated," highlighting a substantial long-term runway in open ablation.
• Management clarified that minimal near-term revenue is expected from recent device approvals in Japan as efforts remain focused on market preparation and rollout.
• Underlying franchise growth offset segment-specific decreases, supporting overall performance.
• In pain management, management cited "encouraging" according to Michael H. Carrel surgeon feedback on Cryo XT and highlighted initiation of the Vanish registry to track acute and phantom limb pain outcomes, aiming to expand validation for non-opioid therapy adoption.
• Hybrid therapy softness continues due to increased PFA catheter adoption, though the company reports early signs of renewed case referrals from sites with prior high hybrid volumes.
• Manufacturing efficiencies are contributing to gross margin gains.

Industry glossary

• LEAPS trial: A landmark global clinical study evaluating the AtriClip device for stroke prevention in cardiac surgery patients without prior atrial fibrillation diagnosis.
• BOX X NOAF trial: A clinical trial focused on reducing post-operative atrial fibrillation incidence in cardiac surgery patients who lack a preexisting AFib condition.
• CABG: Coronary artery bypass graft surgery, a common cardiac operation referenced for market penetration discussion.
• PFA: Pulsed field ablation, an emerging catheter ablation technique being adopted in the minimally invasive market.
• Encompass clamp: A proprietary surgical ablation device contributing to U.S. and international franchise growth for AtriCure.

Full Conference Call Transcript

Michael H. Carrel: Great. And good afternoon, everyone. Thank you for joining us today. We had a very strong third quarter with total revenue of $134 million, reflecting a 16% increase year over year. Our growth was driven across key franchises globally, demonstrating the expanding adoption of our therapies and breadth of market opportunities. We also substantially improved profitability and cash generation with nearly $18 million of adjusted EBITDA, and over $30 million in cash generated in the third quarter. Overall, our revenue growth and profitability exceeded expectations for the quarter, and we will once again raise guidance for the year. Product innovation and clinical science initiatives continue to flourish at AtriCure.

And that is evident in the success of our recent product launches. The AtriClip Flex Mini and Cryosphere Max devices are propelling outstanding growth in appendage pain management in The United States. For the launch of our Encompass plant, is driving accelerated growth in Europe while continuing to fuel steady growth in The United States many years after launch. And we are building on surgeon interest in this product with our PFA platform development program and further expanding our market opportunity with the initiation of our box x No AF clinical trial. Additionally, our Cryo XT device launched this quarter will set a new standard for managing pain in lower limb amputation procedures.

Each initiative reflects our commitment to delivering innovative therapies to address unmet clinical needs for patients around the world. Now on the updates from each of our franchises. Starting with appendage management, where worldwide revenue grew over 20% continuing the acceleration realized in 2025. This is a direct result of increasing adoption of our AtriClip Flex Mini and Pro Mini devices. Both devices leverage our third-generation h equip platform technology featuring a smaller profile clip which improves visibility in procedures. These devices are the smallest surgical LA implants available and build on more than a decade of outstanding results for the over 700,000 patients treated on our AtriClip platform.

Related to the AtriClip, early in the third quarter, we completed enrollment of over 6,500 patients across 137 sites globally in our landmark clinical trial lease. The success of enrollment is a reflection of the strong interest from trial investigators of which over 500 surgeons participated and are now focused on patient follow-up. Although most of you know, the leaps trial is designed to evaluate the use of AtriClip devices for stroke prevention in cardiac surgery patients do not have prior AFib diagnosis. This is a significant underserved patient population with more than 70% of the nearly two million patients who undergo cardiac surgery annually not having a prior AFib diagnosis. And we are very excited about the potential ahead.

While we await the results of the trial, we are driving physician awareness and expanding access to AtriClip devices globally. To that end, we are pleased to announce the recent approvals of our AtriClip Flex V ProV, and Flex Mini devices in Japan. In addition to the groundbreaking clinical evidence from Leafs, we intend to stay leaders in this market. With continuous innovation and have turned our research and development efforts towards delivering the next generation of AtriClip devices. And we look forward sharing our progress over the coming year. Within our ablation franchises, open ablation growth accelerated to over 18% for the quarter.

Sales of our Encompass plants continue to drive growth in The United States and the launch in Europe boosted our international results. As I commented last quarter, the durability of the Encompass claims growth is a clear testament to our ability to deliver meaningful and consistent innovation providing clinicians with effective and time-saving solutions. We expect to further advance concomitant ablation procedures. With our platform development of an Encompass clamp enabled with PSA. We are making progress with robust preclinical testing and expect first in human use over the coming months. Non-technical innovation we're also moving forward with our box x no AF clinical trial and are excited to share that the first patient was treated.

The Oxx No AF trial is another foundational study at AtriCure. Aimed at reducing the onset of post AFib in cardiac surgery patients who do not have a preexisting AFib condition. This trial will significantly expand the opportunity to use our ablation technologies in this broader patient population. Multiplying our cardiac surgery market opportunity overall. Adding to the momentum from our LEAF trial, we believe box x, no AF, will transform the standard of care in cardiac surgery towards preventative approaches. Minimally invasive hybrid therapy market dynamics remain challenging in The US due to increased adoption of PFA catheter technology.

Nonetheless, we continue to see substantial unmet need for patients with long-standing persistent Afib and believe that our hybrid AF therapy is uniquely positioned to address this need. And finally, turning to our pain management franchise, which grew 28% in the quarter and was driven by sales of our latest product innovations, the Cryosphere MAX, and Cryosphere Plus Probes. These product launches have shown the value of reducing procedure times. Allowing us to increase market penetration in thoracic surgery and gain traction the sternotomy market. Another reason for optimism our pain management business is the launch of Cryo XT, which improves recovery and quality of life in patients following extremity amputation.

Feedback already from surgeons using the cryo XT device has been encouraging and we are even more excited by the reports of rapid patient recovery in the days following the procedure. As is the case, with new therapy development, it will take time to ramp the cryo XT use but we are confident that the benefits for patients, physicians, and hospital economics are significant. We recently launched the Vanish registry to track patient outcomes with cryo XC and expect this data to demonstrate acute and phantom limb pain reduction with our cryo nerve block therapy in patients undergoing extremity amputation.

Cryo XT unlocks a meaningful expansion opportunity in pain management and is another example of our ongoing commitment to innovation across all of our franchises. Going forward, we will also continue to invest in comprehensive clinical and economic data to support the value of CryoNerve block therapies. A non-opioid pain management but as non-opioid pain management becomes an increasing priority across health care, these efforts are helping drive broader awareness and adoption. In closing, I want to express my gratitude to our entire AtriCure team for another successful quarter. Your work demonstrates an unrelenting focus on patients.

We are executing well on our growth and profitability objectives, including record cash generation, This quarter providing a strong foundation we end the year and go into 2026. I am confident that our shared determination to deliver exceptional patient outcomes and executing on our strategic priorities will transform standards of care in each of our markets. And with that, I'll turn the call over to Angela L. Wirick, our Chief Financial Officer. Angie? Thank you, Mike.

Angela L. Wirick: Our third quarter 2025 worldwide revenue of $134.3 million increased 15.8% on a reported basis and 15.1% on a constant currency basis when compared to 2024, reflecting healthy adoption across key product lines and markets. On a sequential basis, we experienced normal procedure seasonality with a 1.4% decline from the second quarter to 2025. Third quarter 2025 US revenue was $109.3 million, a 14.5% increase from 2024. While we experienced a decline in our minimally invasive ablation sales $7.4 million for the quarter, all other US franchises drove robust growth from the continued adoption of our innovative technologies. Open ablation product sales in The U.S. were $35.6 million up 16.3% over 2024 driven by expanding use of our Encompass clamp.

Through the third quarter, total accounts purchasing Encompass reached 740 this year, surpassing the 700 accounts purchasing during the entire fiscal year 2024. US sales of appendage management products were $45.4 million up 21.5% over 2024 led by ramping adoption of our recently launched AtriClip Flex Mini device. Growth in open LAA devices was over 6% for the quarter, All our minimally invasive LEA devices were up slightly on conversions to AtriClip Pro Mini, which launched earlier this year. Finally, pain management product sales were $20.8 million up 27.7% over 2024 reflecting increasing application of our cryoSPHERE MAX and cryoSPHERE plus probes primarily in thoracic procedures.

International revenue totaled $25 million up 22% on a reported basis 17.9% on a constant currency basis as compared to 2024. European sales contributed $15.2 million in the quarter representing 24.2% growth. Sales in Asia Pacific and other international markets grew 18.8% to $9.8 million from 2024. Our gross margin was 75.5% an increase of 59 basis points from 2024 driven primarily by more favorable product mix globally stemming in part from new product launches in The United States. Operating expenses for the quarter totaled $101.1 million an increase of $6.9 million or 7.4% from 2024.

Research and development expenses rose 9.2% from 2024 reflecting a slower pace of spending in the quarter as we transition between projects after completing enrollment in LEAPS and multiple new product launches over the last twelve months. SG and A expenses increased 6.8% well below revenue growth for the quarter, demonstrating continued leverage as we further scale our operations. As a result of our strong revenue growth and disciplined approach to invest, we recognized $17.8 million in adjusted EBITDA roughly $10 million above 2024. We expanded our adjusted EBITDA margin to 13.3% for the quarter showing continued progress throughout 2025 and achieving profitable growth.

Our basic and diluted net loss per share as well as the adjusted loss per share was 1¢ in 2025 after compared to 17¢ in 2024. Our balance sheet continues to strengthen as we ended the third quarter with $147.9 million in cash and investments representing positive cash generation of $30.1 million for the quarter. This quarter, we had a one-time cash inflow of approximately $6 million from a sale leaseback transaction as we began the expansion of our Ohio campus. We continue to expect positive cash generation in the first quarter further elevating an already sound capital position. Now turning to our outlook for the remainder of the year.

We now expect to achieve approximately $532 million to $534 million in full year 2025 revenue reflecting approximately 14% to 15% growth compared to 2024. We are confident in the long-term growth trajectory for the large, underpenetrated markets we serve globally. Year to date, gross margin is pacing 20 basis points above 2024 due to shifting product mix. We now expect our full year 2025 gross margin to be slightly higher than 2024 with the potential for varying impacts from geographic and product mix. Next, our priorities for capital allocation continue to on cultivating future catalysts for our business through meaningful investments clinical science, product development, and therapy awareness.

While we make these investments, we are also committed to driving expanded profitability With that in mind, we are raising our positive adjusted EBITDA outlook to approximately $55 million to $57 million for the full year 2025 corresponding to an adjusted loss per share of approximately $0.23 to $0.26 I would also like to thank our extended AtriCure team for exceptional overall financial performance this quarter as we make great strides in our mission to reduce the burden of A fib and postoperative pain we are meaningfully improving the sustainability of our business through continued revenue and margin expansion. At this point, I will turn the call back to Mike.

Michael H. Carrel: Thank you, Angie. Our third quarter performance underpinned by strong revenue growth and increasing profitability highlights our team's persistence and commitment to our patients, partners, and our shareholders. I'm especially proud as we celebrate AtriCure's twenty-fifth anniversary this week These same values of patients, people, and partners have guided our company over the past two and a half decades building to the incredible opportunity that sits in front of us today. Our trajectory is truly exciting, and I look forward to sharing further progress as we end the year and begin 2026. And with that, we will turn it over to questions. On your telephone, and wait for your name to be announced.

To withdraw your question, please press 11 again. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Please stand by while we compile the Q and A roster. Our first question comes from John Young with Canaccord. Your line is open. Hi, Mike and Angie. Congrats on a great quarter. First, I just wanted to ask on the CMS proposal for ablations to possibly move into the ASC setting. Do you believe that the decrease in strain on hospital catheter labs can actually lead to a rebound in the EPiSense business?

Michael H. Carrel: I mean, it's a good question, John. I don't know that's gonna have a material effect on the overall epicence business because we're not that's not really our business per se. I think it'll just lead to more efficiency in the cath labs for sure. I think what's gonna drive the Eversense business is gonna be as they have non-responders to PFA and they go through one or two non-responding PFA techniques with the different catheters are out there, then they're gonna look for, well, how am I gonna treat this patient when I've done everything possible? With the catheters at that point in time?

And so what we're seeing now is we're starting to see some breakthroughs at a couple of sites, sites. It's more than a couple, but several sites, where they're starting to refer some patients. Not enough to drive that revenue growth, yet, but we are definitely starting to see that where are seeing nonresponders. And they've typically gone through two different catheter ablations at that point in time. So that's going to be really kind of the leading indicator for us, more so than the change in the ASC.

John Young: Great. Thanks, Mike. And then is there any way to talk this quantify the opportunity in Japan given those approvals that you got there? Thanks again for taking our questions.

Michael H. Carrel: Yeah. Right now, I mean, there's about 40,000 or so cardiac surgeries in Japan in totality. So obviously with the LEAPS trial and others, you've got the possibility of getting that entire area to cover that. Today, we don't sell that many clips. We do have our AtriClip on the market today. We're the leading player in the market. Relative to that. And obviously now bringing in our newer technology, hopefully, will help accelerate that overall. We don't anticipate getting any revenue in the near term from it as we prep the market over the course of the next six months. But we did just get the approval.

We actually got it earlier than we and we'll be rolling it out sometime next year.

Operator: Thank you. Our next question comes from Lilia-Celine Breton Lozada with JPMorgan. Your line is open.

Lilia-Celine Breton Lozada: Great. Thanks so much for taking the question. Maybe I'll start with one on open, and then I have a follow-up on guidance. But in the open business, 19% growth is really impressive and well ahead of what this segment had done historically. Obviously, Encompass has done really well, but what do you think is driving the acceleration at this point? I know you said you've already basically seen full conversion from the legacy product over to Encompass and that it's really adoption and new accounts and cabbage doctors who historically hadn't been customers that have been driving growth.

Where do you think you stand in penetrating that population, and how long do you think we can see this level of growth in the open business?

Michael H. Carrel: Well, I think you hit it. You could have answered the question right there, Lily. It is primarily CABG patients, because those surgeons have typically not done a good job of doing any kind of ablation on these population. They don't get behind the heart as we've talked about before. And so that's really what you're seeing. More and more surgeons are actually doing ablations that weren't doing it before. And we believe, obviously, Encompass has really helped them get their both from ease of use of the technology and the speed at which, because it cut out about thirty minutes out of the procedure time So it really dramatically improved it from both ease of use and speed.

To actually get a really good ablation done during that. So, yes, that's what's driving it right now. We're still severely underpenetrated in the CABG market, and we're maybe at approaching ten percent of the CABG patients that have a fib are getting treated. Then when you look at all CABG patients, and CABG patients tend to be the ones that go into most post op A fib. And with box x and o a f, we also that as another really big opportunity. We feel good about, obviously, enrolling our first patient in that. That we're gonna enroll in that pretty quickly. You saw what we did around the LEAP side.

We'll enroll in this very quickly and then hopefully get those results in the coming years. Yeah. Maybe one thing to add, Lily, on the growth. It was a little over 16% in The US our open ablation franchise and 26% in our international business. You know, big part of that was the uptick that we're seeing on adoption in Europe for our Encompass clamp where our European open growth was over 30% for the quarter. So I think you know, we're excited, obviously, for the long term, prospects here, as Mike said. Seeing additional adoption and treatment within CABG patients in particular. Great. That's helpful. And then just a clarification on guidance on profitability specifically.

You put up really nice results on adjusted EBITDA. So first, can you talk a bit about the strength that you're seeing from a margin perspective? And second, guidance, I think, implies a sequential step down on adjusted EBITDA. So what's driving that? Is that just conservatism? Or is there something else at play in the fourth quarter that we should be thinking about? Thanks so much.

Angela L. Wirick: Yep. Sure. The touching on margins first, I'd say, starting with gross margin, we, obviously, saw some strength in the quarter with the, you know, shifting mix here. Portion of that is our international business with distributors, a more favorable mix. New product launches, which we've talked about contributing to you know, margin accretion, you know, over the year as those continue to build as a percentage of the overall revenue. And then the third thing I would point out is we are starting to realize some efficiency from our manufacturing specifically with the Encompass clamp. This is a project we have talked about a couple quarters ago. We're starting to see that show up in the numbers as well.

So expansion on the gross margin side within operating expenses, a life quarter in r and d spend. This is transitioning from within clinical trials from our LEAPS clinical trial, which enrolled early in the first quarter to now starting to ramp up with our BOX X NOAF trial. That will start to contribute to spend as you think about the fourth quarter, which is part of what went into the fourth quarter guide. And then continued leverage within s g and a. So to the guide side on the bottom line, really pleased with the progress that we've made so far this year and the progress that we'll continue to make, each quarter going forward.

A bit of conservatism on the bottom line, but then also starting to ramp up some of the R and D initiatives in the fourth quarter.

Operator: Thank you. Our next question comes from Marie Yoko Thibault with BTIG. Your line is open.

Marie Yoko Thibault: Hi, good evening. Thanks for taking the questions, Mike and Angie. Wanted to talk a little bit about the appendage management business. I noticed that this is another quarter of high twenties. Growth in the OpenClip segment of that business. Wanted to understand, you know, I think the majority of this is driven by a volume uptick. Just how sustainable is some of this high 20s growth? Flex Mini, how far along would you say we are in that rollout? Just some understanding of what that segment can do going forward.

Michael H. Carrel: We think there's a tremendous opportunity. I'm not gonna commit to any specific numbers, but from an overall market dynamic standpoint, we're still in less than 30% of all sites in The United States with that product today. We feel like there's a lot of upside just getting insights, let alone getting to all the physician could use them at each one of those sites, in addition to being used on a lot of patients. So we feel like there's a lot of upside, in that opportunity. Not to mention the longer term with, the LEAPS trial and hopefully it expanding the market opportunity in general.

So we think that there's a great deal of opportunity without giving specifics on, like, what each quarter revenue growth is gonna look like. But the opportunity is very large there. Okay. From a revenue lucky. I was just gonna add, Marie, from a revenue contribution pro Flex Mini was around 30%. Of our US open clip growth or open clip revenue for the quarter, Obviously, continue to see really nice uplift each quarter following launch. And a long runway, as Mike said. Yeah. Okay. Another sequential uptick. Great to hear. And then I guess a follow-up on the adjusted EBITDA metric. And my question is more kind of focused on the long range plan that you set out earlier.

On that metric. Clearly ahead of schedule on those goals. So how would you think about the cadence now, the trajectory, where this metric could go? Know, very long term? Thanks for taking questions. Thanks, Marie. At this point, we're not ready to guide for 2026 yet. We are extremely pleased with the progress that we're making on the bottom line, and the trajectory that we're on. Would expect continued improvement as we operate into 2026, I think, relative to our LRP metrics that we put out at our analyst and investor day earlier in the year. We are ahead of schedule. And our goal, you know, all along, both top and bottom line, is to continue to outperform.

Operator: Thank you. Our next question comes from John Glenn McAulay with Stifel. Your line is open. Hi, Mike. Hi, Angie. First one for me, just wanna sort of follow-up on Billy's question about the fourth quarter. In terms of EBITDA, I understand the reasoning typical sort of conservatism for the for the step down. I just wanted to get a better sense of revenue Seems like sort of 12% implied in the fourth quarter. You've been doing mid to mid teens all year. Just any, dynamics in the fourth quarter we should be thinking about puts and takes for performance there?

Angela L. Wirick: John, I'd say we're really confident in the guide. For the fourth quarter and for the full year. It's worth repeating our around guidance, which is to put numbers out there that we feel really confident in achieving with a pathway to beating. So the totality of our business, you can see you know, almost every area is firing on good cylinders here. Hybrid, it will expect continued softness, but that's a very small portion of our business overall. So just pleased with the trajectory there. Really along the philosophy of our guide for the year. In terms of comps, you know, 2024. Thanks. That's helpful. And one follow-up.

Just curious, I may miss I didn't see anything specifically calling out in the press release, but any update on the PFA program, timelines there, progress there? Just be curious to know, next steps and what we should be looking ahead for.

Michael H. Carrel: Yeah. On the PSA, we've, we've done all the preclinical on our products at this point, and we are going into first in human by the end of this year, early part of next year. And then the next step after that we talk about the Analyst Day, is to go into clinical trials. Likely in the early part of 2027. And so no change on that. And we've made great progress on that front and are getting really, really good results in all the work that we're doing.

Operator: Thank you. Our next question comes from Mike Matson with Needham. Your line is open. Hey, Mike. Hey, Angie. It's Joseph on for Mike. Maybe just a couple around pain management. I'm I'm trying just all ask them together. I guess with Cryo XT, is that in a limited launch right now? I have no necessarily know if you said that in the prepared remarks. Or you know, is that more pedal down, launch just given the success with Plus and Max. You know, is there any is there gonna be any contribution to pain management growth of that project? Product in 2025? And then I guess just the pain management portfolio, how much of that is available in Europe?

Michael H. Carrel: Sure. On the related to the XT launch, don't know that I'd call it a limited launch, but definitely a very focused launch at this point in time. And so we see a lot of contribution. Typically with our launches, you don't start to see a lot of contribution until about three to six months after the launch. After we've kind of worked it out, gone to the site, seen a lot of success and kind of built upon that. So I guess you could call limited. We just call it that internally.

But, we don't anticipate much revenue coming this quarter, but we do anticipate in obviously, next year, it will be a meaningful contributor to our overall business in 2026. As it relates to Europe, we do have our cryosphere over there. And so it's being used and there's a lot of it's throughout the Europe and then also in Australia. Okay. Great. And then I'll just ask another one on pain management. I did see a video on AtriCure's website. I guess this was on XT and just, interviewing a surgeon. And he said this quote that just caught me. I'm just kinda curious you guys' opinion.

He said utilizing cryo nerve block for ten to fifteen minutes can add a lifetime of benefit to the patient and the absence or need for secondary procedures. So, obviously, it seems like a very positive comment. I'm just kinda curious. What kind of discussions are you having physicians, or maybe physicians having with each other or their own colleagues to you know, looking for alternatives to opioids or reduced opioid use What are you hearing from them?

Michael H. Carrel: Well, I mean, what we're seeing from the market in general is, I mean, I think what the position on our website was talking about is that you can see the dramatic benefit of this. Unlike our a fib franchise where when they you don't necessarily solve the a fib per se. Right? And there. It's got a long term effect of it. You really wanna affect that long term aspect of it. With the pain management, you literally see it. They recover that much more quickly. They don't have pain when you're in the step down units. They're going through recovery.

So it's quite remarkable see that, and that's why you're hearing that kind of benefit because they can reco like, for example, on an amputation case, they can begin to walk faster. They can get the prosthetics fit more quickly. They can begin to get out of the hospital a lot faster. They don't feel that general pain right away after the surgery. So that's an example. Where the crown nerve block can help.

Then obviously, it'll be long term, what he's referring to is that in his practice, because he was one of the early adopters in this area, he was practicing and seeing actually that there's not just the original post op pain that he's saving, but also longer term phantom limb pain that he's seeing. And those are studies that we have ongoing and that we're looking at to see how we can get those published, etcetera.

Operator: Thank you. Our next question comes from Danielle Joy Antalffy with UBS. Your line is open.

Danielle Joy Antalffy: Hey. Hi. Good afternoon, guys. Thanks so much for taking the question. So just two questions for me. One, Mike and Angie, this is now gosh. I mean, I don't know. Like, the it's multiple years in a row now of mid to high teens open ablation growth. And I'm just curious if you can talk about the sustainability of growth. I know you guys talked about it at your Analyst Day, but maybe remind us what's most important in driving sustainability of growth there? Is it new modalities like PSA? Is it training more surgeons? Is it same store utilization growth? Is it just iterating on the on the products like Encompass, etcetera?

Because it's been a few years now, and it just does not seem to be losing steam.

Michael H. Carrel: Yeah. I mean, biggest thing right there, quite frankly, is awareness. For the product. Because Encompass right now, we have the products today. That's what's gonna drive the overall growth, both in a fib patients And then as you look out longer term, like we talked about at our Analyst Day, in the non AFib patients as well. We think that prophylactic treatment to reduce post op AFib as a with this clinical trial we just kicked off, is gonna have meaningful benefit and helpful with the existing technology we have today. So, the technology works incredibly well. It's very fast to utilize it and get a robust box lesion, and then you add the atriClip to it.

It's incredibly robust from that standpoint. We're already seeing papers get published that show incredible results with that box and the box x lesion. The box being the box and then the x being the exclusion of the appendage, which is exactly what we're seeing in there. So the two big things right now are awareness within the community that this works and is incredibly robust and more papers out. Two is that expanding that opportunity for post op Afib patients because that obviously more than doubles, if not triples, the overall patient population. So that's that's really where you're gonna see the growth, but no new technology per se.

Danielle Joy Antalffy: Okay. Gotcha. And I'm curious about so my second question is on the appendage management business. And I'm actually curious, we have a pretty major clinical trial coming for the minimally invasive approach or I should say, for WATCHMAN, the stand alone approach. And I'm curious as to whether you think that is gonna be a boom for the entire market and help actually your appendage management business. Because if I recall back in the days of you know, early days of WATCHMAN data, what we actually saw was a class increase across the board for appendage management. So I'd I'd love to hear your views on how that could impact your appendage management business. Thanks so much.

Michael H. Carrel: Yeah. I'd I'd love to say that the data coming out of WATCHMAN, at this point, I the awareness is out there on appendage management, the importance of managing it. Both from what WATCHMAN did and if you recall the LOSS three trial for AFib patients was incredibly positive to reducing stroke. And the AtriClip was used in trial as well. So I'd say that and the guidelines have now changed. So there's been a lot of that already in existence, in the open kind of call it, concomitant use of the AtriClip during open heart surgery.

Think the bigger move is going be with LEAPS because LEAPS is really going to open up that market Much like I just mentioned with Boxx, no AF, this is the prophylactic treatment of that appendage, I think is going to be, once we get that data out, which is obviously gonna take a little while, and so we're all gonna be patient on it. That's gonna really move the market and, quite frankly, move our volumes quite dramatically at that point in time.

Operator: Thank you. Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open.

Matthew O'Brien: Hi, Mike and Angie. This is Anna on for Matt. Just if I could ask a question on specifically for AtriClip. There's, you know, been some concern around future entrants disrupting your position in the space. So if you could speak maybe to the moat around AtriClip and the differentiation the device based on the competition you've seen in the past, that would be super helpful.

Michael H. Carrel: Sure. I mean, competition is inevitable. In medical devices. As I've mentioned on this call before, we believe competition is good. Because it means and it validates the space that we're in as being a very large market, especially when very large strategics decide that they're gonna make some level of investment even if it's small, and with inferior products. We do believe that they're gonna come into the market and compete against us and create validation managing the appendage is the right thing to do and create that kind of awareness. We feel like we've got best products in the market. We continue to innovate.

The Flex Mini device and our Flex v device are the best products in the market. We just had clinical data that was published on the V that showed one hundred percent closure using the V clip in one hundred and fifty patients. That was just peer reviewed and published just recently. That's on top of over 95 peer reviewed papers and 16,000 patients that have been studied to date. In peer reviewed articles showing exceptional closure of that product, which obviously is incredibly important.

The level of evidence that is already out there On top of that, and on top of the innovation like the Flex Mini, which is the smallest on the market, creating better visibility, easy, easier to use for, physicians when they're using the product. You've also got the LEAPS trial that is expanding the market and will be the only product in the or the only trial in the market that is gonna demonstrate stroke reduction prophylactically it will be only using the AtriClip. So I think that there's a lot of things over the coming years that are going to be out there to help us benefit and show the AtriClip is obviously the best product in the market.

But in addition to that, I do welcome competition. I think it's good. It's validated. It shows this is a big market that matters and one that others are very interested in.

Matthew O'Brien: Great. Thanks for the color there. And then I guess, on the hybrid business, there's obviously been some softness in that segment for a while now. When do you think you'll reach a bottom there and sort of see that growth inflect a bit.

Michael H. Carrel: Yeah. I mean, as we as I mentioned in my comments, mean, obviously, there's been a lot of pressure on that with the PFA technologies out there specifically. You know, we're not hiding from that in any way. We know that's the case. As I mentioned earlier, kind of the what when John asked the question about progression, we do see people doing multiple ablations before they move on to hybrid. I do think you're gonna start to see some breakthroughs on that. I'm not ready to give a here's the bottom and but you're starting to see definitely more cases coming through from sites that used to do a lot.

Then went to almost zero and are now starting to do some cases again, not back to their old numbers. They're definitely starting to see patients that have failed one or usually two catheters with the PFA and the different technologies that are out there. So we do anticipate that we will eventually see growth coming back to this market. Because there are just so many patients in this market. It just sheer math on it. If there are 600,000 catheter ablations, about ten percent of those that are being ablated every year are long standing persistent patients, which is like sixty thousand patients. And those are the patients where the catheters don't work very well.

And have the highest rate of redo's or having to go back in. And so we anticipate that fall through is going to eventually happen for us and that they're gonna have no other choice but to look for another technology to kind of help them out epicardial like ours.

Operator: Thank you. Our next question comes from Suraj Kalia with Oppenheimer. Your line is open. Suraj, please check your mute button. I'm showing no further questions at this time. I would now like to turn it back to Mike Carroll for closing remarks.

Michael H. Carrel: Sure. Again, everyone, thank you for joining us today on the call. We really do appreciate all of the support and are looking forward to closing the year incredibly strong and having an incredible 2026. Have a wonderful evening. Bye now.

Operator: This concludes today's conference call. Thanks for participating. You may now disconnect.

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