AtriCure, Inc. 10-Q

Item 1. Financial Statements ATRICURE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In Thousands, Except Per Share Amounts) (Unaudited) September 30, 2025 December 31, 2024 Assets Current assets: Cash and cash equivalents $ 147,865 $ 122,721 Accounts receivable, less allowance for credit losses of $ 650 and $ 550 62,980 60,339 Inventories 78,951 75,335 Prepaid and other current assets 11,314 9,431 Total current assets 301,110 267,826 Property and equipment, net 39,551 41,659 Operating lease right-of-use assets 6,800 5,727 Intangible assets, net 50,136 56,467 Goodwill 234,781 234,781 Other noncurrent assets 3,064 2,868 Total Assets $ 635,442 $ 609,328 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 25,472 $ 25,032 Accrued liabilities 49,370 45,587 Other current liabilities 2,998 2,805 Total current liabilities 77,840 73,424 Long-term debt 61,865 61,865 Finance and operating lease liabilities 11,867 11,860 Other noncurrent liabilities 7,363 1,210 Total Liabilities 158,935 148,359 Commitments and contingencies (Note 8) Stockholders’ Equity: Common stock, $ 0.001 par value, 90,000 shares authorized and 49,713 and 48,869 issued and outstanding 50 49 Additional paid-in capital 890,843 863,710 Accumulated other comprehensive income (loss) 573 ( 1,035 ) Accumulated deficit ( 414,959 ) ( 401,755 ) Total Stockholders’ Equity 476,507 460,969 Total Liabilities and Stockholders’ Equity $ 635,442 $ 609,328 See accompanying notes to condensed consolidated financial statements. 3 Table of Contents ATRICURE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue $ 134,269 $ 115,910 $ 394,028 $ 341,030 Cost of revenue 32,937 29,117 98,586 86,125 Gross profit 101,332 86,793 295,442 254,905 Operating expenses: Research and development expenses 22,892 20,960 74,704 61,221 Selling, general and administrative expenses 78,232 73,238 232,676 219,174 Total operating expenses 101,124 94,198 307,380 280,395 Income (loss) from operations 208 ( 7,405 ) ( 11,938 ) ( 25,490 ) Other income (expense): Interest expense ( 1,468 ) ( 1,667 ) ( 4,374 ) ( 4,956 ) Interest income 1,165 1,281 3,148 3,230 Loss on debt extinguishment — — — ( 1,362 ) Other income 9 260 641 206 Loss before income tax expense ( 86 ) ( 7,531 ) ( 12,523 ) ( 28,372 ) Income tax expense 181 322 681 758 Net loss $ ( 267 ) $ ( 7,853 ) $ ( 13,204 ) $ ( 29,130 ) Basic and diluted net loss per share $ ( 0.01 ) $ ( 0.17 ) $ ( 0.28 ) $ ( 0.62 ) Weighted average shares outstanding—basic and diluted 47,920 47,105 47,680 46,912 Comprehensive income (loss): Unrealized gain on investments $ — $ 15 $ — $ 800 Foreign currency translation adjustment ( 176 ) 407 1,608 46 Other comprehensive income (loss) ( 176 ) 422 1,608 846 Net loss ( 267 ) ( 7,853 ) ( 13,204 ) ( 29,130 ) Comprehensive loss, net of tax $ ( 443 ) $ ( 7,431 ) $ ( 11,596 ) $ ( 28,284 ) See accompanying notes to condensed consolidated financial statements. 4 Table of Contents ATRICURE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In Thousands) (Unaudited) Three-Month Period Ended September 30, 2024 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance—June 30, 2024 48,686 $ 49 $ 840,939 $ ( 378,334 ) $ ( 569 ) $ 462,085 Impact of equity compensation plans 62 — 10,367 — — 10,367 Other comprehensive income — — — — 422 422 Net loss — — — ( 7,853 ) — ( 7,853 ) Balance—September 30, 2024 48,748 $ 49 $ 851,306 $ ( 386,187 ) $ ( 147 ) $ 465,021 Three-Month Period Ended September 30, 2025 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance—June 30, 2025 49,691 $ 50 $ 878,384 $ ( 414,692 ) $ 749 $ 464,491 Impact of equity compensation plans 22 — 12,459 — — 12,459 Other comprehensive loss — — — — ( 176 ) ( 176 ) Net loss — — — ( 267 ) — ( 267 ) Balance—September 30, 2025 49,713 $ 50 $ 890,843 $ ( 414,959 ) $ 573 $ 476,507 Nine-Month Period Ended September 30, 2024 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance—December 31, 2023 47,526 $ 48 $ 824,170 $ ( 357,057 ) $ ( 993 ) $ 466,168 Impact of equity compensation plans 1,222 1 27,136 — — 27,137 Other comprehensive income — — — — 846 846 Net loss — — — ( 29,130 ) — ( 29,130 ) Balance—September 30, 2024 48,748 $ 49 $ 851,306 $ ( 386,187 ) $ ( 147 ) $ 465,021 Nine-Month Period Ended September 30, 2025 Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance—December 31, 2024 48,869 $ 49 $ 863,710 $ ( 401,755 ) $ ( 1,035 ) $ 460,969 Impact of equity compensation plans 844 1 27,133 — — 27,134 Other comprehensive income — — — — 1,608 1,608 Net loss — — — ( 13,204 ) — ( 13,204 ) Balance—September 30, 2025 49,713 $ 50 $ 890,843 $ ( 414,959 ) $ 573 $ 476,507 See accompanying notes to condensed consolidated financial statements. 5 Table of Contents ATRICURE, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) Nine Months Ended September 30, 2025 2024 Cash flows from operating activities: Net loss $ ( 13,204 ) $ ( 29,130 ) Adjustments to reconcile net loss to net cash provided by operating activities: Share-based compensation expense 33,425 30,020 Depreciation 9,093 8,273 Amortization of intangible assets 6,331 5,634 Amortization of deferred financing costs 359 359 Amortization of investments — 107 Loss on debt extinguishment — 1,362 Acquired in-process research and development expense 5,000 — Other non-cash adjustments 726 725 Changes in operating assets and liabilities: Accounts receivable ( 1,855 ) ( 2,238 ) Inventories ( 2,711 ) ( 8,571 ) Other current assets ( 1,687 ) 1,107 Accounts payable 315 4,239 Accrued liabilities 3,292 ( 4,762 ) Other noncurrent assets and liabilities ( 1,777 ) ( 757 ) Net cash provided by operating activities 37,307 6,368 Cash flows from investing activities: Sales and maturities of available-for-sale securities — 53,668 Purchases of property and equipment ( 7,448 ) ( 8,766 ) Proceeds from sale of property and equipment — 25 Acquisitions, including in-process research and development ( 5,000 ) — Proceeds from capital grant 500 — Net cash (used in) provided by investing activities ( 11,948 ) 44,927 Cash flows from financing activities: Proceeds from revolving credit facility, net of financing costs — 61,210 Payments on debt, leases and financing obligation ( 880 ) ( 62,598 ) Proceeds from financing obligation 6,250 — Payment of financing costs and bank fees — ( 1,069 ) Proceeds from stock option exercises and employee stock purchase plan 4,643 3,875 Shares repurchased for payment of taxes on stock awards ( 10,935 ) ( 6,759 ) Net cash used in financing activities ( 922 ) ( 5,341 ) Effect of exchange rate changes on cash and cash equivalents 707 71 Net increase in cash and cash equivalents 25,144 46,025 Cash and cash equivalents—beginning of period 122,721 84,310 Cash and cash equivalents—end of period $ 147,865 $ 130,335 Supplemental cash flow information: Cash paid for interest $ 3,919 $ 3,601 Cash paid for taxes, net of refunds 1,630 576 Non-cash investing and financing activities: Accrued purchases of property and equipment 333 1,184 See accompanying notes to condensed consolidated financial statements. 6 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) 1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of the Business —The “Company” or “AtriCure” consists of AtriCure, Inc. and its wholly-owned subsidiaries. The Company is a leading innovator in surgical treatments and therapies for atrial fibrillation (Afib), left atrial appendage (LAA) management and post-operative pain management, and sells its products to medical centers globally through its direct sales force and distributors. Basis of Presentation —The accompanying interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). All intercompany accounts and transactions have been eliminated in consolidation. The accompanying interim financial statements are unaudited, but in the opinion of the Company’s management, contain all normal, recurring adjustments considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (GAAP) applicable to interim periods. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted or condensed. The Company believes the disclosures herein are adequate to make the information presented not misleading. Results of operations are not necessarily indicative of the results expected for the full year or for any future period. 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, 2024 filed with the SEC. Except as discussed herein, there have been no changes in the Company's significant accounting policies for the nine months ended September 30, 2025 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. 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, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense. Actual results could differ from those estimates. Segments —The Company evaluates reporting segments in accordance with the Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) 280, "Segment Reporting". The chief operating decision maker is its Chief Executive Officer. The Company has one business activity and operates as one operating segment: the development, manufacture and sale of devices used by physicians in surgical procedures, designed primarily for ablation of cardiac tissue, exclusion of the left atrial appendage and ablation of peripheral nerves. These devices are developed and marketed to a broad base of medical centers globally. Management considers all such sales to be part of the single operating segment. The Chief Executive Officer is regularly provided with consolidated expenses consistent with the presented consolidated statements of operations, accompanied by revenue information by product type and geographic area, for purposes of allocating resources and evaluating financial performance. Revenue by product type and geographic area is included at Note 9 – Revenue. The Company’s long-lived assets are located in the United States, except for $ 5,891 as of September 30, 2025 and $ 4,021 as of December 31, 2024 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 2,897 and 2,724 shares as of September 30, 2025 and 2024 because they are anti-dilutive. Therefore, the number of shares used for basic and diluted net loss per share are the same. Sale-and-Leaseback Transaction —Sale-and-leaseback transactions occur when a company sells assets to a third-party and simultaneously leases them back. In accordance with FASB ASC 842, "Leases", for potential sale-and-leaseback transactions, the Company assesses the contract to identify if a sale occurred via transfer of control of the assets in accordance with ASC 606 "Revenue from Contracts with Customers". In cases where control has not transferred, we continue to recognize the underlying asset within Property and equipment, net within the consolidated balance sheets, which is then depreciated over the shorter of the remaining useful life or lease term. Additionally, a financial liability is recognized and referred to as a financing obligation and is accounted for similarly to debt or finance leases. Rental payments are recognized as a reduction of the financing obligation and interest expense using the effective interest method. During the quarter ended September 30, 2025, the Company entered into one failed sale-and-leaseback transaction. See additional discussion in Note 6 – Borrowings and Financing Obligation . 7 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) Recently Issued Accounting Pronouncements Not Yet Adopted —In September 2025, the FASB issued Accounting Standards Update (ASU) No. 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Topic 350-40): Targeted Improvements to the Accounting for Internal-Use Software". This amendment modernizes and makes targeted improvements to the accounting for software costs found under Topic 350-40, effective for fiscal years and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of adopting this standard on its consolidated financial statements and disclosures. 2. FAIR VALUE Fair value is defined as the exchange price that would be received for an asset or paid to settle a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. To measure the fair value of assets and liabilities, the Company uses the following fair value hierarchy based on three levels of inputs: • Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities. • Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 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, 2025: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Total Assets: Money market funds $ 137,941 $ — $ — $ 137,941 Total assets $ 137,941 $ — $ — $ 137,941 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, 2025. 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, 2024: Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Total Assets: Money market funds $ 101,147 $ — $ — $ 101,147 Total assets $ 101,147 $ — $ — $ 101,147 Contingent Consideration. 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, 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 as remote, resulting in no reported fair value as of September 30, 2025 and December 31, 2024. 8 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) 3. INVENTORIES Inventories consist of the following: September 30, 2025 December 31, 2024 Raw materials $ 39,841 $ 37,703 Work in process 8,011 3,604 Finished goods 31,099 34,028 Total $ 78,951 $ 75,335 4. INTANGIBLE ASSETS The following table provides a summary of the Company’s intangible assets: September 30, 2025 December 31, 2024 Cost Accumulated Amortization Cost Accumulated Amortization Technology $ 46,470 $ 15,384 $ 46,470 $ 13,103 Patents 30,000 10,950 30,000 6,900 Total $ 76,470 $ 26,334 $ 76,470 $ 20,003 The following table summarizes the allocation of amortization expense of intangible assets: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Cost of revenues $ 1,350 $ 1,125 $ 4,050 $ 3,375 Research and development expenses 760 761 2,281 2,259 Total $ 2,110 $ 1,886 $ 6,331 $ 5,634 Future amortization expense is projected as follows: 2025 (excluding the nine months ended September 30, 2025) $ 2,110 2026 9,535 2027 10,435 2028 6,535 2029 2,935 2030 and thereafter 18,586 Total $ 50,136 5. ACCRUED LIABILITIES Accrued liabilities consist of the following: September 30, 2025 December 31, 2024 Accrued compensation and employee-related expenses $ 42,895 $ 39,505 Sales returns and allowances 3,576 3,123 Other accrued liabilities 2,899 2,959 Total $ 49,370 $ 45,587 9 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) 6. BORROWINGS AND FINANCING OBLIGATION Asset backed revolving credit facility. The Company has 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) effective January 5, 2024. The Credit Agreement provides for an asset based revolving credit facility (ABL Facility) in an amount of up to $ 125,000 . Borrowing availability under the ABL Facility is based on the lesser of $ 125,000 or a borrowing base calculation as defined by the Credit Agreement. The Company may request an increase in the revolving commitment by up to $ 40,000 (not to exceed a total of $ 165,000 ). A portion of the ABL Facility, limited to $ 5,000 , is available for the issuance of letters of credit by JPMCB or other financial institutions. JPMCB in its sole discretion, may create swingline loans by advancing floating rate revolving loans requested. Any such swingline loans will reduce availability under the ABL Facility on a dollar-for-dollar basis. The Credit Agreement has a three-year term, and all outstanding borrowings are due upon maturity of the Credit Agreement on January 5, 2027. Subject to customary exceptions and restrictions, the Company may voluntarily prepay outstanding amounts under the ABL Facility at any time thereafter without premium or penalty. 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. As of September 30, 2025, the Company had borrowings of $ 61,865 and had borrowing capacity of $ 61,885 under the ABL facility. Future maturities of long-term debt are projected as follows: 2025 (excluding the nine months ended September 30, 2025) $ — 2026 — 2027 61,865 2028 — 2029 — Total long-term debt, of which $ 61,865 is noncurrent $ 61,865 The ABL Facility is subject to a facility fee of 0.37 % per annum of the daily available revolving commitment and paid on a quarterly basis. Outstanding amounts under the Credit Agreement bear interest at a rate per annum equal to, at the Company's election: (i) an alternate base rate (ABR) plus an applicable margin or (ii) an adjusted term secured overnight financing rate (SOFR) plus an applicable margin. All swingline loans bear interest at a rate per annum equal to the ABR plus the applicable margin under the Credit Agreement. Alternate base rate is equal to the greater of Prime, the NYFRB Rate plus 0.50 % or Adjusted Term SOFR Rate plus 1.00 %. The applicable margin on borrowings will adjust ranging from 1.50 % to 1.75 % per annum for ABR borrowings and from 2.50 % to 2.75 % per annum for SOFR term borrowings determined by the average historical excess availability. Participation and fronting fees are accrued and paid on a quarterly basis. As of September 30, 2025, the effective interest rate on the ABL Facility was 7.00 %. The ABL Facility is secured by the assets of the Company, consisting of personal, tangible or intangible property, including certain outstanding equity interests of the Company’s direct subsidiaries, subject to limitations specified in the Credit Agreement. 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 and minimum excess availability, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness. Financing obligation. In August 2025, the Company transferred legal ownership of a building and certain real property on its corporate headquarters campus in Mason, Ohio for cash consideration of $ 6,250 . Simultaneously, the Company entered into a contract to lease back the existing building and real property, as well as the planned building expansion space from the buyer-lessor. The buyer-lessor is financing the development and construction of the expansion of additional manufacturing and office space. During construction of the expansion, the Company will maintain occupancy and pay rent for the existing building. Upon construction completion, the expanded premises will be leased for fifteen years with three five-year options to renew. Annual rental payments will be calculated at an amount equal to 8 % of the construction costs and will escalate 3 % annually. Rental payments will be allocated between the existing and the expanded property based on the relative fair value upon construction completion. Expansion rental payments are projected to be $ 38,469 for the fifteen year lease term expected to 10 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) begin during 2026. The classification of the lease related to the expansion will be assessed upon completion of construction. Rental payments will be finalized upon completion of the expansion construction. Estimated rental payments for the expansion over the next five annual periods are as follows: 2025 $ — 2026 1,034 2027 2,099 2028 2,162 2029 2,227 2030 2,294 The lease of the existing building and certain real property sold is a failed sale-and-leaseback as a result of finance lease classification. The Company recorded a financing obligation equal to the $ 6,250 cash proceeds received. The Company allocated projected rental payments during the term of construction and fifteen-year lease term based on the estimated fair value of the existing real property assets and future expansion. The company imputes interest monthly at a rate of 6.76 %. During the three and nine months ended September 30, 2025, interest expense was not significant. Future maturities of the financing obligation are projected as follows: 2025 (excluding the nine months ended September 30, 2025) $ 11 2026 81 2027 128 2028 152 2029 180 2030 and thereafter 5,694 Total long-term financing obligation, of which $ 64 is current $ 6,246 The financing obligation is included in Other current liabilities and Other noncurrent liabilities on the Condensed Consolidated Balance Sheet. See additional discussion in Note 1 – Description of the Business and Summary of Significant Accounting Policies. 7. LEASES The Company has operating and finance leases for office, manufacturing and warehouse facilities and automobiles. The Company’s leases have remaining lease terms of less than one year to ten years . 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. The weighted average remaining lease term and the discount rate for the reporting periods are as follows: September 30, 2025 December 31, 2024 Operating Leases Weighted average remaining lease term (years) 5.4 4.4 Weighted average discount rate 6.9 % 6.9 % Finance Leases Weighted average remaining lease term (years) 4.9 5.7 Weighted average discount rate 7.0 % 7.0 % 11 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) 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, 2025. The components of lease expense are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Operating lease cost $ 504 $ 423 $ 1,461 $ 1,187 Finance lease cost: Amortization of right-of-use assets 262 262 786 785 Interest on lease liabilities 137 157 426 474 Total finance lease cost $ 399 $ 419 $ 1,212 $ 1,259 Short-term lease expense was not significant for the three and nine months ended September 30, 2025 and 2024. Supplemental cash flow information related to leases is as follows: Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 1,528 $ 1,206 Operating cash flows for finance leases 426 474 Financing cash flows for finance leases 876 774 Right-of-use assets and corresponding lease obligations related to new and modified lease agreements: Operating leases $ 2,010 $ 2,651 Finance leases — 421 12 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) Supplemental balance sheet information related to leases is as follows: September 30, 2025 December 31, 2024 Operating Leases Operating lease right-of-use assets $ 6,800 $ 5,727 Other current liabilities $ 1,659 $ 1,619 Finance and operating lease liabilities 5,551 4,579 Total operating lease liabilities $ 7,210 $ 6,198 Finance Leases Property and equipment, at cost $ 14,765 $ 14,765 Accumulated depreciation ( 9,661 ) ( 8,875 ) Property and equipment, net $ 5,104 $ 5,890 Other current liabilities $ 1,275 $ 1,186 Finance and operating lease liabilities 6,316 7,281 Total finance lease liabilities $ 7,591 $ 8,467 Future maturities of lease liabilities as of September 30, 2025 are as follows: Operating Leases Finance Leases 2025 (excluding the nine months ended September 30, 2025) $ 506 $ 441 2026 1,831 1,775 2027 1,779 1,808 2028 1,361 1,842 2029 971 1,818 2030 and thereafter 2,377 1,339 Total payments $ 8,825 $ 9,023 Less imputed interest ( 1,615 ) ( 1,432 ) Total $ 7,210 $ 7,591 8. COMMITMENTS AND CONTINGENCIES Cooperation Agreement. The Company holds an exclusive licensing agreement (Cooperation Agreement) to co-develop and commercialize equipment incorporating pulsed field ablation (PFA) technology. The Cooperation Agreement requires the Company to pay contingent consideration, settled in cash, with a maximum total payout of $ 28,000 if all milestones are achieved successfully through the agreement term ending in 2034. The contingent consideration will be expensed when each milestone is paid or becomes payable as a result of achievement. Payments made under this agreement were $ 5,000 for the nine months ended September 30, 2025 and included as a component of research and development expense. During October 2025, the next milestone was achieved. The impact of the $ 1,000 payment and expense will be included in the fourth quarter of 2025. The agreement also contains provisions requiring future royalty payments on devices incorporating co-developed technology upon commercialization. Purchase Agreements. The Company enters into standard purchase agreements with suppliers in the ordinary course of business, generally with terms that allow cancellation. In 2022, the Company entered into a clinical trial management agreement for the LeAAPS clinical trial. The terms of the agreement require payments upon achievement of various enrollment and project milestones over the estimated ten-year term, however, the agreement may be terminated early for any reason. Furthermore, the Company incurs additional variable costs, including pass through costs from clinical trial sites. Payments 13 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) made under this agreement were $ 5,144 and $ 312 for the three months ended September 30, 2025 and 2024, respectively, and $ 12,631 and $ 6,461 for the nine months ended September 30, 2025 and 2024, respectively. In August 2025, the Company entered into a non-cancellable cloud computing arrangement with a term of seven years requiring total payments of $ 3,616 . Payments under this agreement will begin March 2026. Legal. The Company may, from time to time, become a party to legal proceedings which are subject to many uncertainties. Litigation and administrative proceedings over patent and other intellectual property rights are common in our industry, as are requests for information related to interactions with medical professionals. Accordingly, the financial impact of ultimate resolutions from legal proceedings may not be known for extended periods of time and are not predictable with assurance. A liability is established once management determines a loss is probable and an amount can be reasonably estimated. The Company recognizes income from a favorable resolution of legal proceedings when the associated cash or assets are received. On February 7, 2025, the representative for former securityholders of SentreHEART, Inc. filed a complaint in the Delaware Court of Chancery naming the Company as a defendant, and on May 23, 2025 filed a first amended complaint. The Company acquired SentreHEART, Inc. pursuant to a merger agreement dated August 11, 2019. The merger agreement provides for contingent consideration to be paid upon achievement of specified PMA and CPT reimbursement milestones by specified dates. The amended complaint alleges breach of contract and a related claim for breach of the implied covenant of good faith and fair dealing resulting from the Company's alleged failure to use commercially reasonable efforts to obtain premarket approval from FDA for the LARIAT System. The amended complaint seeks damages in the amount of the original PMA and CPT reimbursement milestones of up to $ 260,000 plus interest. The Company intends to vigorously defend this claim. A liability has not been recognized related to this matter because any potential loss is not currently probable or reasonably estimable. 9. REVENUE 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. The Company recognizes revenue when control of promised goods is transferred to customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. United States revenue by product type is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Open ablation $ 35,592 $ 30,601 $ 105,368 $ 90,661 Minimally invasive ablation 7,428 11,117 23,747 35,263 Pain management 20,837 16,314 59,275 44,059 Appendage management 45,450 37,420 132,649 111,257 Total United States $ 109,307 $ 95,452 $ 321,039 $ 281,240 International revenue by product type is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Open ablation $ 10,852 $ 8,607 $ 30,196 $ 25,679 Minimally invasive ablation 1,862 1,681 6,247 5,559 Pain management 2,080 1,590 5,902 3,768 Appendage management 10,168 8,580 30,644 24,784 Total International $ 24,962 $ 20,458 $ 72,989 $ 59,790 14 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) Revenue attributed to customer geographic locations is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 United States $ 109,307 $ 95,452 $ 321,039 $ 281,240 Europe 15,170 12,215 45,501 36,193 Asia Pacific 8,083 6,914 22,351 19,916 Other International 1,709 1,329 5,137 3,681 Total International 24,962 20,458 72,989 59,790 Total Revenue $ 134,269 $ 115,910 $ 394,028 $ 341,030 10. INCOME TAX PROVISION The Company files federal, state and foreign income tax returns in jurisdictions with varying statutes of limitations. The Company uses the asset and liability method to determine its provision for income taxes. The Company’s provision for income taxes in interim periods is computed by applying the discrete method and is based on financial results through the end of the interim period. The Company determined that using the discrete method is more appropriate than using the annual effective tax rate method. 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 September 30, 2025 and 2024 was ( 210.5 %) and ( 4.3 %), respectively. The effective tax rate for the nine months ended September 30, 2025 and 2024 was ( 5.4 %) and ( 2.7 %), respectively. The Company’s worldwide effective tax rate differs from the US statutory rate of 21% primarily due to valuation allowances. The Company's federal, state, local and foreign tax returns are subject to review by various taxing authorities. The Company has not accrued any interest and penalties related to unrecognized income tax benefits as a result of offsetting net operating losses. However, if required, the Company will recognize interest and penalties within income tax expense and within the related tax liability. On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. Key elements of the Tax Cuts and Jobs Act of 2017 are made permanent under the OBBBA, including 100% bonus depreciation, domestic research cost expensing and the business interest expense limitation. The legislation has multiple effective dates, with certain provisions effective in 2025 and others effective in 2026 or 2027. FASB ASC 740, "Income Taxes", requires the effects of changes in tax rates and laws on tax balances to be recognized in the period in which the legislation is enacted. As the Company maintains a full valuation allowance on its U.S. deferred tax assets, the legislation did not have a material impact on the income tax expense or effective tax rate for the three months ended September 30, 2025. 11. EQUITY COMPENSATION PLANS The Company has two share-based incentive plans: the 2023 Stock Incentive Plan (2023 Plan) and the 2018 Employee Stock Purchase Plan (ESPP). Stock Incentive Plan Under the 2023 Plan, the Board of Directors may grant restricted stock awards or restricted stock units (collectively RSAs), nonstatutory stock options, performance share awards, performance share units or stock appreciation rights to Company employees, directors and consultants, and may grant incentive stock options to Company employees. 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 September 30, 2025, 5,787 shares of common stock have been reserved for issuance under the 2023 Plan, and 3,127 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. 15 Table of Contents ATRICURE, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In Thousands, except per share amounts) (Unaudited) Employee Stock Purchase Plan Under the ESPP, shares of the Company’s common stock may be purchased at a discount ( 15 %) to the lesser of the closing price of the Company’s common stock on the first or last trading day of the offering period. The offering period (currently six months ) and the offering price are subject to change. 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 September 30, 2025, there were 381 shares available for future issuance under the ESPP. Share-Based Compensation Expense Information The following table summarizes the allocation of share-based compensation expense: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Cost of revenue $ 773 $ 578 $ 2,183 $ 1,736 Research and development expenses 2,164 1,738 5,998 5,090 Selling, general and administrative expenses 9,487 8,048 25,244 23,194 Total $ 12,424 $ 10,364 $ 33,425 $ 30,020 12. COMPREHENSIVE LOSS AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) In addition to net losses, comprehensive loss includes foreign currency translation adjustments and unrealized gains (losses) on investments. Accumulated other comprehensive income (loss) consisted of the following, net of tax: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Total accumulated other comprehensive income (loss) at beginning of period $ 749 $ ( 569 ) $ ( 1,035 ) $ ( 993 ) Unrealized Gains (Losses) on Investments Balance at beginning of period $ — $ ( 15 ) $ — $ ( 800 ) Other comprehensive income before reclassifications — 15 — 800 Balance at end of period $ — $ — $ — $ — Foreign Currency Translation Adjustment Balance at beginning of period $ 749 $ ( 554 ) $ ( 1,035 ) $ ( 193 ) Other comprehensive income (loss) before reclassifications ( 77 ) 586 2,280 199 Amounts reclassified to other income ( 99 ) ( 179 ) ( 672 ) ( 153 ) Balance at end of period $ 573 $ ( 147 ) $ 573 $ ( 147 ) Total accumulated other comprehensive income (loss) at end of period $ 573 $ ( 147 ) $ 573 $ ( 147 ) 16 Table of Contents