What changed in this filing

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Item 1. Financial Statements

2024-10-30 compared with 2024-07-31 · 113 added, 109 removed, 424 unchanged (34% of the section changed)

4 unchanged sentences

(In Thousands, Except Per Share Amounts)

September 30,

2024 December 31,

38 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

30 unchanged sentences

(In Thousands)

Three-Month Period Ended June 30, 2023

Three-Month Period Ended September 30, 2023

Deficit Accumulated

2 unchanged sentences

Stockholders’

Balance—March 31, 2023

Balance—June 30, 2023

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

2 unchanged sentences

Net loss — — — ( 9,055 ) — ( 9,055 )

Balance—June 30, 2023

Balance—September 30, 2023

47,392 $ 47 $ 812,238 $ ( 347,268 ) $ ( 2,184 ) $ 462,833

Three-Month Period Ended June 30, 2024

Three-Month Period Ended September 30, 2024

Deficit Accumulated

2 unchanged sentences

Stockholders’

Balance—March 31, 2024

Balance—June 30, 2024

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

2 unchanged sentences

Net loss — — — ( 7,853 ) — ( 7,853 )

Balance—June 30, 2024

Balance—September 30, 2024

48,748 $ 49 $ 851,306 $ ( 386,187 ) $ ( 147 ) $ 465,021

Six-Month Period Ended June 30, 2023

Nine-Month Period Ended September 30, 2023

Deficit Accumulated

7 unchanged sentences

Net loss — — — ( 20,649 ) — ( 20,649 )

Balance—June 30, 2023

Balance—September 30, 2023

47,392 $ 47 $ 812,238 $ ( 347,268 ) $ ( 2,184 ) $ 462,833

Six-Month Period Ended June 30, 2024

Nine-Month Period Ended September 30, 2024

Deficit Accumulated

7 unchanged sentences

Net loss — — — ( 29,130 ) — ( 29,130 )

Balance—June 30, 2024

Balance—September 30, 2024

48,748 $ 49 $ 851,306 $ ( 386,187 ) $ ( 147 ) $ 465,021

4 unchanged sentences

(In Thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

15 unchanged sentences

Other noncurrent assets and liabilities ( 757 ) ( 400 )

Net cash used in operating activities ( 13,636 ) ( 1,068 )

Net cash provided by operating activities 6,368 454

Cash flows from investing activities:

9 unchanged sentences

( 1,069 ) ( 60 )

Proceeds from stock option exercises 3,809 4,058

Proceeds from stock option exercises and employee stock purchase plan

Shares repurchased for payment of taxes on stock awards ( 6,759 ) ( 6,473 )

2 unchanged sentences

Net increase in cash and cash equivalents

46,025 22,499

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

21 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 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.

There have been no changes in the Company's significant accounting policies for the nine months ended September 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 $ 3,800 as of June 30, 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 $ 4,278 as of September 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 2,675 and 1,839 shares as of June 30, 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 2,724 and 1,776 shares as of September 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 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 September 30, 2024:

Quoted Prices in

6 unchanged sentences

Money market funds $ — $ 106,137 $ — $ 106,137

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

Total assets $ — $ 106,137 $ — $ 106,137

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.

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three and nine months ended September 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:

14 unchanged sentences

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.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

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

Cost Basis Unrealized

Losses Fair Value

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

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

The Company had no investments as of September 30, 2024.

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 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

Amortized Cost Fair Value

Due in 1 year or less

$ 8,000 $ 7,985

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

Actual maturities may differ from the contractual maturities due to call or prepayment rights.

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

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Inventories consist of the following:

September 30,

2024 December 31,

5 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Cost Accumulated

3 unchanged sentences

Total $ 76,470 $ 18,118 $ 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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

Future amortization expense is projected as follows:

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

2024 (excluding the nine months ended September 30, 2024)

2029 and thereafter

2 unchanged sentences

Accrued liabilities consist of the following:

September 30,

2024 December 31,

3 unchanged sentences

Total $ 39,980 $ 44,682

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

On January 5, 2024, the Company entered into a credit agreement (Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., as bookrunner and lead arranger (JPMCB), and Silicon Valley Bank, a Division of First-Citizens Bank & Trust Company, as Joint Lead Arrangers and Joint Bookrunners, and the lenders party thereto (Lenders).

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

As of September 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

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.

The Credit Agreement contains mandatory 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 six months ended June 30, 2024) $ —

2024 (excluding the nine months ended September 30, 2024) $ —

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

8 unchanged sentences

The Credit Agreement contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including but not limited to financial covenants relating to a fixed charge coverage ratio, a minimum liquidity requirement and a minimum excess availability requirement, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

The Company has operating and finance leases for office, manufacturing and warehouse facilities and automobiles.

2 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Operating Leases

4 unchanged sentences

Weighted average discount rate 7.00 % 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 June 30, 2024.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

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 September 30, 2024.

The components of lease expense are as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

4 unchanged sentences

Total finance lease cost $ 419 $ 421 $ 1,259 $ 1,276

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

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

Supplemental cash flow information related to leases is as follows:

Six Months Ended

June 30, 2024 Six Months Ended

June 30, 2023

Nine Months Ended

September 30, 2024 Nine Months Ended

September 30, 2023

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

5 unchanged sentences

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:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Operating Leases

1 unchanged sentence

Current lease liabilities

$ 1,558 $ 1,447

Finance and operating lease liabilities

8 unchanged sentences

Total finance lease liabilities $ 8,748 $ 9,147

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:

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

Operating Leases Finance Leases

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

$ 1,740 $ 860

2024 (excluding the nine months ended September 30, 2024)

2025 1,808 1,742

10 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.

See Legal section below for additional

See Legal section below for additional information.

Purchase Agreements.

4 unchanged sentences

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

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

Department of Justice (USDOJ) in December 2017 stating that it is investigating the Company to determine whether the Company has violated the False Claims Act, relating to the promotion of certain medical devices related to the treatment of atrial fibrillation for off-label use and submitted or caused to be submitted false claims to certain federal and state health care programs for medically unnecessary healthcare services related to the treatment of atrial fibrillation.

The CID covers the period from January 2010 to December 2017 and required the production of documents and answers to written interrogatories.

The Company had no knowledge of the investigation prior to receipt of the CID.

The Company maintains rigorous policies and procedures to promote compliance with the False Claims Act and other applicable regulatory requirements.

The Company provided the USDOJ with documents and answers to the written interrogatories.

In March 2021, USDOJ informed the Company that its investigation was based on a lawsuit brought on behalf of the United States and various state and local governments under the qui tam provisions of federal and certain state and local False Claims Acts.

Although the USDOJ and all of the state and local governments declined to intervene, the relator continues to pursue the case.

During the third quarter of 2022, the relator filed a Fourth Amended Complaint, which dropped allegations of off-label promotion and alleges that the Company paid illegal kickbacks to healthcare providers in exchange for using or referring the Company’s products, in violation of the federal Anti-Kickback Statute and various comparable state and local laws.

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.

2 unchanged sentences

(In Thousands, except per share amounts)

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

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

Department of Justice (USDOJ) in December 2017 stating that it was investigating the Company to determine whether the Company has violated the False Claims Act, relating to the promotion of certain medical devices related to the treatment of atrial fibrillation for off-label use and submitted or caused to be submitted false claims to certain federal and state health care programs for medically unnecessary healthcare services.

Although the USDOJ and all of the state and local governments declined to intervene, the relator continued to pursue the case.

During the third quarter of 2022, the relator filed a Fourth Amended Complaint, which alleged that the Company paid illegal kickbacks.

In September 2024, the District Court granted the Company's motion to dismiss the Fourth Amended Complaint and denied the relator's request for leave to further amend the complaint.

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

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

4 unchanged sentences

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.

The remaining $ 3,088 was allocated to the settlement and was included in selling, general and administrative expenses for the nine months ended September 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 $ 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.

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

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

These devices are marketed to a broad base of medical centers globally.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Total United States $ 95,452 $ 81,692 $ 281,240 $ 244,784

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

International revenue by product type is as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

5 unchanged sentences

Total International $ 20,458 $ 16,598 $ 59,790 $ 47,918

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

Revenue attributed to customer geographic locations is as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

11 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 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 effective tax rate for the three months ended September 30, 2024 and 2023 was ( 4.3 %) and ( 0.5 %).

The effective tax rate for the nine months ended September 30, 2024 and 2023 was ( 2.7 %) and ( 1.1 %).

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 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.

As of September 30,

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

2024, 4,087 shares of common stock have been reserved for issuance under the 2023 Plan, and 2,482 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 June 30, 2024, there were 621 shares available for future issuance under the ESPP.

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

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

Share-Based Compensation Expense Information

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

6 unchanged sentences

Balance at beginning of period $ ( 554 ) $ ( 379 ) $ ( 193 ) $ ( 398 )

Other comprehensive (loss) income before reclassifications ( 125 ) 28 ( 388 ) 153

Amounts reclassified to other income (expense) 7 8 27 ( 134 )

Other comprehensive income (loss) before reclassifications

586 ( 286 ) 199 ( 133 )

Amounts reclassified to other (expense) income

( 179 ) 10 ( 153 ) ( 124 )

Balance at end of period $ ( 147 ) $ ( 655 ) $ ( 147 ) $ ( 655 )

Total accumulated other comprehensive loss at end of period $ ( 147 ) $ ( 2,184 ) $ ( 147 ) $ ( 2,184 )

ATRICURE, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

SUBSEQUENT EVENT

During October 2024, the Company entered into an exclusive licensing agreement with a third-party to co-develop and commercialize equipment incorporating pulsed field ablation (PFA) technology.

The agreement requires upfront payment of $ 12,000 during the fourth quarter of 2024 and obligates the Company to pay up to $ 28,000 in additional consideration if defined milestones are met during specified periods concluding ten years from the effective date.

The agreement also contains provisions requiring future royalty payments on devices incorporating co-developed technology upon commercialization.

There was no financial impact during the third quarter of 2024 related to the agreement.

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