AtriCure, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and notes thereto contained in Item 1 of Part I of this Form 10-Q and our audited consolidated financial statements and notes thereto as well as the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and for the year ended December 31, 2025 included in our Form 10-K filed with the Securities and Exchange Commission (SEC). This discussion and analysis are intended to provide an understanding of our results of operations, financial condition and cash flows and contains forward-looking statements reflecting current expectations that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those set forth under Item 1A “Risk Factors,” the cautionary statement regarding forward-looking statements below and elsewhere in this Form 10-Q.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and notes thereto contained in Item 1 of Part I of this Form 10-Q and our audited consolidated financial statements and notes thereto as well as the information under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as of and for the year ended December 31, 2025 included in our Form 10-K filed with the Securities and Exchange Commission (SEC). This discussion and analysis are intended to provide an understanding of our results of operations, financial condition and cash flows and contain forward-looking statements reflecting current expectations that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those set forth under Item 1A “Risk Factors,” the cautionary statement regarding forward-looking statements below and elsewhere in this Form 10-Q.

Previous wording

This Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21F of the Securities Exchange Act of 1934. All forward-looking information is inherently uncertain and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this quarterly report on Form 10-Q, and in our annual report on Form 10-K for the year ended December 31, 2025 as amended by our subsequent quarterly reports on Form 10-Q. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Forward-looking statements often address our expected future business, financial performance, financial condition and results of operations, and often contain words such as “intends,” “estimates,” “anticipates,” “hopes,” “projects,” “plans,” “expects,” “drives,” “seek,” “believes,” “see,” “focus,” “should,” “will,” “would,” “opportunity,” “outlook,” “could,” “can,” “may,” “future,” “predicts,” “target,” “potential,” "forecast," "trend," "might" and similar expressions and the negative versions of those words, and may be identified by the context in which they are used. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, without limitation, statements that address activities, events, circumstances or developments that AtriCure expects, believes or anticipates will or may occur in the future, such as earnings estimates (including projections and guidance), other predictions of financial performance, launches by AtriCure of new products, developments with competitors and market acceptance of AtriCure's products. Such statements are based largely upon current expectations of AtriCure. Any forward-looking statement speaks only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward-looking statements are based on AtriCure’s expectations, experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances and are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s control. In light of these risks, uncertainties and other factors, the forward-looking events and circumstances described may not occur and our financial condition and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. In o…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All forward-looking information is inherently uncertain and actual results may differ materially from assumptions, estimates or expectations reflected or contained in the forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this quarterly report on Form 10-Q, and in our annual report on Form 10-K for the year ended December 31, 2025 as updated by our subsequent quarterly reports on Form 10-Q. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Forward-looking statements often address our expected future business, financial performance, financial condition and results of operations, and often contain words such as “intends,” “estimates,” “anticipates,” “hopes,” “projects,” “plans,” “expects,” “drives,” “seek,” “believes,” “see,” “focus,” “should,” “will,” “would,” “opportunity,” “outlook,” “could,” “can,” “may,” “future,” “predicts,” “target,” “potential,” "forecast," "trend," "might" and similar expressions and the negative versions of those words, and may be identified by the context in which they are used. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements include, without limitation, statements that address activities, events, circumstances or developments that AtriCure expects, believes or anticipates will or may occur in the future, such as earnings estimates (including projections and guidance), other predictions of financial performance, launches by AtriCure of new products, developments with competitors and market acceptance of AtriCure's products. Such statements are based largely upon current expectations of AtriCure. Any forward-looking statement speaks only as of the date made. Reliance should not be placed on forward-looking statements because they involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed or implied. Forward-looking statements are based on AtriCure’s expectations, experience and perception of current conditions, trends, expected future developments and other factors it believes are appropriate under the circumstances and are subject to numerous risks and uncertainties, many of which are beyond AtriCure’s control. In light of these risks, uncertainties and other factors, the forward-looking events and circumstances described may not occur and our financial condition and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. In o…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In 2026, we have maintained growth across most of our key franchises and geographies, resulting from our strategic initiatives of product innovation, clinical science and physician education and training to expand awareness and adoption. Our worldwide revenue for the six months ended June 30, 2026 was $294,853, representing an increase of $35,094, or 13.5% (12.6% on a constant currency basis), over the first six months of 2025, highlighted by accelerated adoption in our pain management, appendage management, and open ablation product lines, where recent product innovation continued to contribute to growth. We have limited competition today; however, our key markets are attracting competition from new entrants developing competing products, procedures, and/or clinical solutions. Increasing competition may lead to loss of market share in critical franchises, pricing and margin pressure, and increased costs, which could adversely affect our revenue and profitability.

Current wording

Our strategic initiatives are primarily focused on product innovation, clinical science and physician education and training to expand awareness and adoption. In 2026, we have maintained growth across most of our key franchises and geographies, resulting from past and current investments in our strategic initiatives. Our worldwide revenue for the nine months ended September 30, 2026 was $449,303, representing an increase of $55,275, or 14.0% (13.4% on a constant currency basis), over the first nine months of 2025, highlighted by continued strength in pain management, appendage management, and open ablation product lines, where recent product innovation remained a key factor in driving revenue growth. We have limited competition today; however, our key markets are attracting competition from new entrants developing competing products, procedures, and/or clinical solutions. Increasing competition may lead to loss of market share in critical franchises, pricing and margin pressure, and increased costs, which could adversely affect our revenue and profitability.

Previous wording

PRODUCT INNOVATION. We continue to deliver growth from our most recent product innovations. We remain focused on sustaining this momentum by advancing our internal research and product development efforts with the objective of enhancing our existing portfolio and supporting the introduction of future products while pursuing regulatory approvals to market and sell globally across all franchises. In April 2026, we received CE mark approval under EU MDR in Europe for our AtriClip FLEX-Mini® and AtriClip PRO-Mini® devices and expect to launch both products in Europe later this year.

Current wording

PRODUCT INNOVATION. We continue to deliver growth from several product innovations, such as our EnCompass clamp, cryoSPHERE® MAX™ probe, AtriClip FLEX-Mini® and AtriClip PRO-Mini®devices, and our cryoXT device. We remain focused on sustaining this momentum by advancing our internal research and product development efforts with the objective of enhancing our existing portfolio and supporting the introduction of future products while pursuing regulatory approvals to market and sell globally across all franchises. In April 2026, we received CE mark approval under EU MDR in Europe for our AtriClip FLEX-Mini® and AtriClip PRO-Mini® devices and launched both products in Europe during October 2026. In October 2026, we received FDA 510(k) clearance for the 30 mm AtriClip FLEX-Mini device. The clearance expands the AtriClip FLEX-Mini product portfolio and provides an additional size option for surgeons performing left atrial appendage exclusion procedures. We expect to commercially launch the product before the end of 2026.

Previous wording

LeAAPS. The Left Atrial Appendage Exclusion for Prophylactic Stroke Reduction (LeAAPS) IDE clinical trial is designed to evaluate the effectiveness of prophylactic LAA exclusion using the AtriClip LAA Exclusion System for the prevention of ischemic stroke or systemic arterial embolism in cardiac surgery patients without pre-operative AF diagnosis who are at risk for these events. This prospective, multicenter, randomized trial evaluates safety at 30 days post-procedure to demonstrate no increased risk with LAA exclusion during cardiac surgery, and efficacy over a minimum follow-up period of five years post procedure. In July 2025, we completed trial enrollment of 6,573 patients across 139 centers globally. Patient follow-up for a minimum of five years post procedure is required by the study protocol and remains ongoing.

Current wording

LeAAPS. The Left Atrial Appendage Exclusion for Prophylactic Stroke Reduction (LeAAPS) IDE clinical trial is designed to evaluate the effectiveness of prophylactic LAA exclusion using the AtriClip LAA Exclusion System for the prevention of ischemic stroke or systemic arterial embolism in cardiac surgery patients without pre-operative AF diagnosis who are at risk for these events. This prospective, multicenter, randomized trial evaluates safety at 30 days post-procedure to demonstrate no increased risk with LAA exclusion during cardiac surgery. In July 2025, we completed trial enrollment of 6,573 patients across 139 centers globally. The trial is event-driven, and patient follow-up for the protocol-required minimum of five years post-procedure remains ongoing.

Previous wording

BoxX-NoAF. The Box Lesion and Left Atrial Appendage EXclusion Procedure for the Prevention of New Onset of Atrial Fibrillation (BoxX-NoAF) IDE trial evaluates the impact of concomitant ablation using the EnCompass® clamp and LAA exclusion with the AtriClip system in non-AF patients for the reduction of post-operative AF (POAF) and Clinical AF. This prospective, multi-center, multi-national randomized trial evaluates safety at 30 days post-procedure for POAF and secondary effectiveness for Clinical AF through three years. The trial provides enrollment of up to 960 subjects across 75 sites. Site initiation and enrollment is ongoing.

Current wording

BoxX-NoAF. The Box Lesion and Left Atrial Appendage EXclusion Procedure for the Prevention of New Onset of Atrial Fibrillation (BoxX-NoAF) IDE trial is a randomized trial to evaluate if prophylactic ablation using the EnCompass® clamp and exclusion of the Left Atrial Appendage with the AtriClip system at the time of other routine cardiac surgery can reduce the incidence of post operative AF (POAF) and clinical AF during long term follow up in patients who have not yet developed AF but are at risk. This prospective, multi-center, multi-national randomized trial evaluates safety and effectiveness at 30 days post-procedure for POAF and secondary effectiveness for Clinical AF through three years. The trial provides enrollment of up to 960 subjects across 75 sites. We expect to complete site initiation and enrollment during the fourth quarter of 2026.

Previous wording

Worldwide revenue increased 12.8% (12.4% on a constant currency basis). In the United States, we realized a 13.6% increase in revenue driven by key product lines: cryoSPHERE® MAX™ probe for post-operative pain management, EnCompass clamp for open ablation and AtriClip FLEX-Mini and AtriClip PRO-Mini devices for appendage management. Minimally invasive ablation sales declined during the quarter from continued reduction in Hybrid procedures as physicians adopt PFA catheters to treat patients. International sales increased 9.6% (7.1% on a constant currency basis), with growth in appendage management, open ablation and pain management franchises.

Current wording

Worldwide revenue increased 15.0% (15.1% on a constant currency basis). In the United States, we realized a 17.1% increase in revenue driven by key product lines: cryoSPHERE® MAX™ probe for post-operative pain management, EnCompass clamp for open ablation and AtriClip FLEX-Mini and AtriClip PRO-Mini devices for appendage management. Minimally invasive ablation sales declined during the quarter from continued reduction in Hybrid procedures as physicians adopt PFA catheters to treat patients. International sales increased 5.8% (6.1% on a constant currency basis), with growth in all franchises.

Previous wording

Cost of revenue and gross margin. Cost of revenue increased $1,264 reflecting higher sales volumes. Gross margin increased 258 basis points, driven primarily by favorable product and geographic mix.

Current wording

Cost of revenue and gross margin. Cost of revenue increased $2,163 reflecting higher sales volumes. Gross margin increased 180 basis points, driven primarily by favorable product and geographic mix.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased $4,172, or 5.3%, driven by $2,228 higher personnel costs, including travel and share-based compensation, largely as a result of headcount growth. Marketing and training costs increased $1,357 driven by expanded training activities, while IT expenses increased $579.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased $4,649, or 5.9%, due to $3,850 in higher personnel costs, including travel and share-based compensation, largely attributed to commercial headcount growth. The remaining increase was driven by other administrative costs, including IT, legal and professional expenses.

Previous wording

Six months ended June 30, 2026 compared to six months ended June 30, 2025

Current wording

Nine months ended September 30, 2026 compared to nine months ended September 30, 2025

Previous wording

Worldwide revenue increased 13.5% (12.6% on a constant currency basis). In the United States, we realized a 14.2% increase in revenue driven by key product lines including new product launches: EnCompass clamp for open ablation, cryoSPHERE MAX probe for post-operative pain management and AtriClip FLEX-Mini and AtriClip PRO-Mini devices for appendage management. Minimally invasive ablation sales declined from continued reduction in Hybrid procedures as physicians adopt PFA catheters to treat patients. International sales increased 10.5% (5.3% on a constant currency basis), with growth in appendage management, pain management and open ablation franchises.

Current wording

Worldwide revenue increased 14.0% (13.4% on a constant currency basis). In the United States, we realized a 15.2% increase in revenue driven by EnCompass clamp for open ablation and cryoSPHERE MAX probe for post-operative pain management and new product launches AtriClip FLEX-Mini and AtriClip PRO-Mini devices for appendage management. Minimally invasive ablation sales declined from continued reduction in Hybrid procedures as physicians adopt PFA catheters to treat patients. International sales increased 8.9% (5.5% on a constant currency basis), with growth in appendage management, pain management and open ablation franchises.

Previous wording

Cost of revenue and gross margin. Cost of revenue increased $318 reflecting higher sales volumes. Gross margin increased 269 basis points, driven primarily by favorable product and geographic mix, along with manufacturing efficiencies.

Current wording

Cost of revenue and gross margin. Cost of revenue increased $3,427 reflecting higher sales volumes. Gross margin increased 232 basis points, driven primarily by favorable product and geographic mix.

Previous wording

Research and development expenses. Research and development expenses decreased $2,882 or 9.8%, primarily driven by the $5,000 decrease in pulsed-field ablation co-development milestone payment paid in the second quarter of 2025. This decrease was offset by $847 increased product development projects reflecting continued investment in our product pipeline, $801 increased regulatory filing and submission costs related to clinical initiatives, and $498 higher personnel costs, including travel and share-based compensation.

Current wording

Research and development expenses. Research and development expenses increased $8,049, or 10.8%, driven by $2,451 higher clinical activity costs from BoxX-NoAF enrollment in 2026 offset by the close of LeAAPS enrollment during 2025; a $2,382 increased investment in our product pipeline through new product development projects; $1,474 increased regulatory filing and submission costs, and $1,090 higher personnel costs, including share-based compensation and travel.

Previous wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased $12,668, or 8.2%, driven by $8,727 higher personnel costs, including travel and share-based compensation, largely as a result of incremental headcount to support sales growth. Marketing and training costs increased $2,036 driven by expanded training activities. IT expenses increased $783 while operational growth drove the remaining increase in general and administrative costs.

Current wording

Selling, general and administrative expenses. Selling, general and administrative expenses increased $17,317, or 7.4%, driven by $12,577 higher personnel costs, including travel and share-based compensation, largely as a result of incremental headcount to support sales growth. Marketing and training costs increased $1,888 led by expanded training activities. IT expenses increased $1,240. Expense related to meeting costs increased $890, and continued operational growth drove the remaining increase.

Previous wording

As of June 30, 2026, we had cash and cash equivalents of $167,786 and outstanding debt of $61,000. We had unused borrowing capacity of $62,750 (see Note 6 – Borrowings and Financing Obligation for related discussion). All cash equivalents and most of our operating cash is held in United States financial institutions. A small portion of our cash is held in foreign banks to support our international operations. We had net working capital of $263,615 and an accumulated deficit of $404,140 as of June 30, 2026.

Current wording

As of September 30, 2026, we had cash and cash equivalents of $187,031 and outstanding debt of $61,000. We had unused borrowing capacity of $62,750 (see Note 6 – Borrowings and Financing Obligation for related discussion). All cash equivalents and most of our operating cash is held in United States financial institutions. A small portion of our cash is held in foreign banks to support our international operations. We had net working capital of $279,418 and an accumulated deficit of $400,076 as of September 30, 2026.

Previous wording

Consolidated Cash Flows - For the six months ended June 30, 2026 and 2025

Current wording

Consolidated Cash Flows - For the nine months ended September 30, 2026 and 2025

Previous wording

Cash flows provided by operating activities. Net cash provided by operating activities increased $7,605 from 2025 to 2026, reflecting improved operating results of $22,000, driven by higher sales, improved operating margin and no acquired IPR&D expense in 2026. In 2025, we incurred $5,000 related to the acquired IPR&D milestone payment. These improvements were offset by an increase of $13,142 in working capital cash outflows primarily due to an increase in accounts receivable from increased sales as well as investments in inventory to support future growth.

Current wording

Cash flows provided by operating activities. Net cash provided by operating activities increased $11,211 from 2025 to 2026, reflecting improved operating results of $26,331, driven by higher sales and improved operating margin. These improvements were offset by an increase of $18,855 in working capital cash outflows primarily due to an increase in accounts receivable from increased sales as well as investments in inventory to support future growth.

Previous wording

For a discussion of recently issued accounting pronouncements, refer to Note 1, “Description of the Business and Summary of Significant Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC. There have been no new accounting pronouncements issued or adopted during the interim period that are expected to have a material impact on our consolidated financial statements.

Current wording

For a discussion of recently issued accounting pronouncements, refer to Note 1 – Description of Business and Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC. There have been no new accounting pronouncements issued or adopted during the interim period that are expected to have a material impact on our consolidated financial statements.