What changed in this filing

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Item 1. Financial Statements

2024-07-31 compared with 2024-05-02 · 120 added, 69 removed, 413 unchanged (31% of the section changed)

23 unchanged sentences

Accrued liabilities 32,018 44,682

Current maturities of lease liabilities 2,542 2,533

Current lease liabilities

Total current liabilities 61,225 74,569

18 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Revenue $ 116,269 $ 100,918 $ 225,120 $ 194,412

10 unchanged sentences

Loss on debt extinguishment

— — ( 1,362 ) —

Other income (expense)

28 ( 123 ) ( 54 ) 22

Loss before income tax expense ( 7,755 ) ( 5,025 ) ( 20,841 ) ( 11,423 )

14 unchanged sentences

(In Thousands)

Three Months Ended March 31, 2023

Three-Month Period Ended June 30, 2023

Deficit Accumulated

2 unchanged sentences

Stockholders’

Balance—December 31, 2022

Balance—March 31, 2023

47,244 $ 47 $ 790,965 $ ( 333,095 ) $ ( 3,072 ) $ 454,845

2 unchanged sentences

Net loss — — — ( 5,118 ) — ( 5,118 )

Balance—June 30, 2023

47,352 $ 47 $ 803,197 $ ( 338,213 ) $ ( 2,609 ) $ 462,422

Three-Month Period Ended June 30, 2024

Deficit Accumulated

Comprehensive

Income (Loss)

Stockholders’

Balance—March 31, 2024

48,381 $ 48 $ 827,288 $ ( 370,326 ) $ ( 697 ) $ 456,313

Three Months Ended March 31, 2024

Impact of equity compensation plans 305 1 13,651 — — 13,652

Other comprehensive income — — — — 128 128

Net loss — — — ( 8,008 ) — ( 8,008 )

Balance—June 30, 2024

48,686 $ 49 $ 840,939 $ ( 378,334 ) $ ( 569 ) $ 462,085

Six-Month Period Ended June 30, 2023

Deficit Accumulated

7 unchanged sentences

Net loss — — — ( 11,594 ) — ( 11,594 )

Balance—March 31, 2024

Balance—June 30, 2023

47,352 $ 47 $ 803,197 $ ( 338,213 ) $ ( 2,609 ) $ 462,422

Six-Month Period Ended June 30, 2024

Deficit Accumulated

Comprehensive

Income (Loss)

Stockholders’

Balance—December 31, 2023

47,526 $ 48 $ 824,170 $ ( 357,057 ) $ ( 993 ) $ 466,168

Impact of equity compensation plans 1,160 1 16,769 — — 16,770

Other comprehensive income — — — — 424 424

Net loss — — — ( 21,277 ) — ( 21,277 )

Balance—June 30, 2024

48,686 $ 49 $ 840,939 $ ( 378,334 ) $ ( 569 ) $ 462,085

See accompanying notes to condensed consolidated financial statements.

3 unchanged sentences

(In Thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

19 unchanged sentences

Purchases of property and equipment ( 5,158 ) ( 5,582 )

Proceeds from sale of property and equipment 25 —

Acquisition of intellectual property — ( 30,000 )

Net cash provided by investing activities 40,535 12,733

8 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 166 ) ( 1 )

Net (decrease) increase in cash and cash equivalents

( 19,343 ) 19,242

Net increase in cash and cash equivalents

Cash and cash equivalents—beginning of period 84,310 58,099

2 unchanged sentences

Cash paid for interest $ 2,175 $ 3,078

Net cash paid (received) for income taxes 17 ( 12 )

Net cash paid for income taxes 509 159

Non-cash investing and financing activities:

16 unchanged sentences

The accompanying interim financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC.

There have been no changes in the Company's significant accounting policies for the three months ended March 31, 2024 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

There have been no changes in the Company's significant accounting policies for the six months ended June 30, 2024 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates —The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including inventories, intangible assets, valuation allowance for deferred income tax assets, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense, including share-based compensation expense.

3 unchanged sentences

Accordingly, the Company has determined that it has a single operating segment.

The Company’s long-lived assets are located in the United States, except for $ 3,625 as of March 31, 2024 and $ 3,432 as of December 31, 2023 located primarily in Europe.

The Company’s long-lived assets are located in the United States, except for $ 3,800 as of June 30, 2024 and $ 3,432 as of December 31, 2023 located primarily in Europe.

Earnings Per Share —Basic and diluted net loss per share are computed by dividing the net loss by the weighted average number of common shares outstanding during the period.

Since the Company has experienced net losses for all periods presented, net loss per share excludes the effect of 2,615 and 1,882 shares as of March 31, 2024 and 2023 because they are anti-dilutive.

Since the Company has experienced net losses for all periods presented, net loss per share excludes the effect of 2,675 and 1,839 shares as of June 30, 2024 and 2023 because they are anti-dilutive.

Therefore, the number of shares used for basic and diluted net loss per share are the same.

11 unchanged sentences

(In Thousands, except per share amounts)

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of March 31, 2024:

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of June 30, 2024:

Quoted Prices in

7 unchanged sentences

Government and agency obligations 7,985 — — 7,985

Corporate bonds — 25,891 — 25,891

Asset-backed securities — 2,247 — 2,247

Total assets $ 7,985 $ 85,887 $ — $ 93,872

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three months ended March 31, 2024.

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three and six months ended June 30, 2024.

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2023:

13 unchanged sentences

The Company’s contingent consideration arrangements arising from the SentreHEART acquisition obligate the Company to pay certain defined amounts to former shareholders of SentreHEART if specified milestones are met related to the aMAZE™ IDE clinical trial, including PMA approval and reimbursement for the therapy involving SentreHEART’s devices.

The PMA approval milestone expired December 31, 2023.

The Company assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no reported fair value as of March 31, 2024 and December 31, 2023.

The PMA approval milestone expired December 31, 2023, while the achievement period for the reimbursement milestone expires on December 31, 2026.

The Company assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no reported fair value as of June 30, 2024 and December 31, 2023.

ATRICURE, INC.

2 unchanged sentences

(In Thousands, except per share amounts)

Investments as of March 31, 2024 consisted of the following:

Investments as of June 30, 2024 consisted of the following:

Cost Basis Unrealized

Losses Fair Value

Corporate bonds $ 26,000 $ ( 109 ) $ 25,891

Government and agency obligations $ 8,000 $ ( 15 ) $ 7,985

Asset-backed securities 2,252 ( 5 ) 2,247

Total $ 41,251 $ ( 261 ) $ 40,990

Investments as of December 31, 2023 consisted of the following:

5 unchanged sentences

Total $ 53,775 $ ( 800 ) $ 52,975

The gross realized gains or losses from sales of available-for-sale investments were not significant in the three months ended March 31, 2024 and 2023.

The cost and fair value of investments in debt securities, by contractual maturity, as of March 31, 2024 were as follows:

The gross realized gains or losses from sales of available-for-sale investments were not significant in the three and six months ended June 30, 2024 and 2023.

The cost and fair value of investments in debt securities, by contractual maturity, as of June 30, 2024 were as follows:

Available-for-sale

2 unchanged sentences

$ 8,000 $ 7,985

Instruments not due at a single maturity date 2,252 2,247

Total $ 41,251 $ 40,990

Instruments not due at a single maturity date consist of asset-backed securities.

6 unchanged sentences

Total $ 73,654 $ 67,897

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

INTANGIBLE ASSETS

The following table provides a summary of the Company’s intangible assets:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cost Accumulated

3 unchanged sentences

Total $ 76,470 $ 16,232 $ 76,470 $ 12,484

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

The following table summarizes the allocation of amortization expense of intangible assets:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Cost of revenues $ 1,125 $ 480 $ 2,250 $ 480

Selling, general and administrative expenses 738 738

Research and development expenses

760 738 1,498 1,476

Total $ 1,885 $ 1,218 $ 3,748 $ 1,956

Future amortization expense is projected as follows:

2024 (excluding the three months ended March 31, 2024)

2024 (excluding the six months ended June 30, 2024)

2029 and thereafter

14 unchanged sentences

Any such swingline loans will reduce availability under the ABL Facility on a dollar-for-dollar basis.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

At closing, the Company borrowed $ 61,865 .

2 unchanged sentences

The termination of the SVB Loan Agreement was treated as a debt extinguishment and the resulting loss on debt extinguishment is $ 1,362 .

As of March 31, 2024, the Company had borrowings of $ 61,865 and had borrowing capacity of $ 61,885 under the ABL facility.

As of June 30, 2024, the Company had borrowings of $ 61,865 and had borrowing capacity of $ 61,885 under the ABL facility.

The Credit Agreement has a three-year term, and all outstanding borrowings are due upon maturity of the Credit Agreement on January 5, 2027.

2 unchanged sentences

Any voluntary prepayments made will not reduce commitments under the ABL Facility.

The Credit Agreement contains mandatory prepayment provisions which require prepayment of amounts outstanding under the ABL Facility upon specified events or Availability shortfall.

The Credit Agreement contains mandatory

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

prepayment provisions which require prepayment of amounts outstanding under the ABL Facility upon specified events or Availability shortfall.

Future maturities of long-term debt are projected as follows:

2024 (excluding the three months ended March 31, 2024) $ —

2024 (excluding the six months ended June 30, 2024) $ —

Total long-term debt, of which $ 61,865 is noncurrent

11 unchanged sentences

Options to renew or extend leases beyond their initial term have been excluded from measurement of the right-of-use (ROU) assets and lease liabilities as exercise is not reasonably certain.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

The weighted average remaining lease term and the discount rate for the reporting periods are as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Operating Leases

4 unchanged sentences

Weighted average discount rate 7.07 % 6.93 %

A letter of credit for $ 1,250 issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of March 31, 2024.

A letter of credit for $ 1,250 issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of June 30, 2024.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

The components of lease expense are as follows:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Operating lease cost $ 384 $ 325 $ 764 $ 635

3 unchanged sentences

Total finance lease cost $ 428 $ 425 $ 840 $ 855

Short-term lease expense was not significant for the three months ended March 31, 2024 and 2023.

Short-term lease expense was not significant for the three and six months ended June 30, 2024 and 2023.

Supplemental cash flow information related to leases is as follows:

Three Months Ended

March 31, 2024 Three Months Ended

March 31, 2023

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Financing cash flows for finance leases 505 483

Right-of-use assets obtained in exchange for lease obligations:

Right-of-use assets and corresponding lease obligations related to new and modified lease agreements:

Operating leases 322 1,068

Finance leases 421 —

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Supplemental balance sheet information related to leases is as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Operating Leases

Operating lease right-of-use assets $ 4,030 $ 4,324

Current maturities of lease liabilities

Current lease liabilities

Finance and operating lease liabilities

4 unchanged sentences

Property and equipment, net $ 6,413 $ 6,515

Current maturities of lease liabilities

Current lease liabilities

$ 1,129 $ 1,086

1 unchanged sentence

Total finance lease liabilities $ 9,017 $ 9,147

Future maturities of lease liabilities as of March 31, 2024 are as follows:

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Future maturities of lease liabilities as of June 30, 2024 are as follows:

Operating Leases Finance Leases

2024 (excluding the three months ended March 31, 2024)

2024 (excluding the six months ended June 30, 2024)

$ 1,740 $ 860

11 unchanged sentences

In May 2023, the Company entered into an agreement that terminated the license agreement and the Company's obligations to make royalty payments under the license agreement.

Royalty expense of $ 0 and $ 901 was recorded for the three months ended March 31, 2024 and 2023 as a component of Cost of Revenue in the accompanying Condensed Consolidated Statement of Operations.

See Legal section below for additional

Purchase Agreements.

4 unchanged sentences

The Company recognizes income from a favorable resolution of legal proceedings when the associated cash or assets are received.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

The Company received a Civil Investigative Demand (CID) from the U.S.

8 unchanged sentences

While the Company is contesting the case, it is not possible to predict when this matter may be resolved or what impact, if any, the outcome of this matter might have on our consolidated financial position, results of operations or cash flows.

On August 23, 2022, the Cleveland Clinic Foundation (“CCF”) and IDx Medical, Ltd.

(“IDx”) filed a Demand for Arbitration against the Company with the American Arbitration Association (“AAA”), alleging that the Company breached certain provisions of the License Agreement dated December 9, 2003 among the Company, Clinic and IDx (“License Agreement”).

Clinic and IDx alleged that the Company did not include the revenues from sales of certain products in its royalty payments due under the License Agreement, and the Company did not provide related notices required under the License Agreement.

The Company filed its Answering Statement and Counterclaims to the allegations in September 2022, denying each

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

claim and counterclaiming for breach of contract, correction of inventorship, declaratory judgment, patent prosecution and legal fees.

In May 2023, the Company entered into an Assignment and Agreement Regarding IDx and CCF Intellectual property (“Assignment Agreement”) with Clinic and IDx.

Pursuant to the Assignment Agreement, during the second quarter of 2023, the Company made a one-time payment of $ 33,400 to Clinic and IDx for the acquisition of patents and other intellectual property.

The Assignment Agreement also requires dismissal of the arbitration and release of payment for royalty obligations due to Clinic and IDx under the License Agreement after March 31, 2023.

The amount paid, together with transaction costs, was allocated between the acquired intangible asset, the release of payment for royalty obligations and the settlement of the dispute.

The intangible asset was assigned a value of $ 30,000 and is being amortized over an estimated useful life of 5 years.

The release of the royalty obligations was valued at $ 432 .

The remaining $ 3,088 was allocated to the settlement and was included in selling, general and administrative expenses for the three months ended June 30, 2023.

During the first quarter of 2023, the Company entered into a legal settlement for $ 7,500 in connection with the settlement of claims filed against a competitor.

The Company recorded a $ 4,000 gain for the three months ended March 31, 2023 for the proceeds received as a reduction to selling, general and administrative expenses.

The Company recorded a $ 3,500 gain for the three months ended June 30, 2023 and $ 7,500 for the six months ended June 30, 2023 for the proceeds received as a reduction to selling, general and administrative expenses.

The Company develops, manufactures and sells devices designed primarily for surgical ablation of cardiac tissue, exclusion of the left atrial appendage, and temporarily blocking pain by ablating peripheral nerves.

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Open ablation $ 30,760 $ 27,002 $ 60,060 $ 52,144

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Open ablation $ 9,170 $ 7,722 $ 17,072 $ 15,008

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

United States $ 95,539 $ 84,903 $ 185,788 $ 163,092

10 unchanged sentences

The Company is unable to estimate the annual effective tax rate with sufficient precision to use the effective tax rate method, which requires a full-year projection of income.

The effective tax rate for the three months ended March 31, 2024 and 2023 was ( 1.4 %) and ( 1.2 %).

The effective tax rate for the three months ended June 30, 2024 and 2023 was ( 3.3 %) and ( 1.9 %).

The effective tax rate for the six months ended June 30, 2024 and 2023 was ( 2.1 %) and ( 1.5 %).

The Company’s worldwide effective tax rate differs from the US statutory rate of 21% primarily due to valuation allowances.

8 unchanged sentences

The Compensation Committee of the Board of Directors, as the administrator of the 2023 Plan, has the authority to determine the terms of any awards, including the number of shares subject to each award, the exercisability of the awards and the form of consideration.

As of March 31, 2024, 2,287 shares of common stock have been reserved for issuance under the 2023 Plan, and 869 shares were available for future grants.

As of June 30, 2024, 4,087 shares of common stock have been reserved for issuance under the 2023 Plan, and 2,543 shares were available for future grants.

The Company issues registered shares of common stock for stock option exercises, restricted stock grants and performance share award payments.

3 unchanged sentences

Participants may not purchase more than $ 25 of the Company’s common stock in a calendar year or more than 3 shares during an offering period.

As of March 31, 2024, there were 782 shares available for future issuance under the ESPP.

As of June 30, 2024, there were 621 shares available for future issuance under the ESPP.

ATRICURE, INC.

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Cost of revenue $ 628 $ 471 $ 1,158 $ 914

6 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Total accumulated other comprehensive loss at beginning of period $ ( 697 ) $ ( 3,072 ) $ ( 993 ) $ ( 4,096 )

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements