What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-27 compared with 2026-05-06 · 75 added, 28 removed, 135 unchanged (43% of the section changed)

33 unchanged sentences

Recent Developments

During the first quarter of 2026, we realized strong growth 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 three months ended March 31, 2026 was $141,249, representing an increase of $17,629, or 14.3% (12.8% on a constant currency basis), over the first three months of 2025, highlighted by accelerated adoption in our pain management, appendage management, and open ablation product lines, where recent product innovation contributed to growth.

There are limited competitors in our key markets;

however, new entrants are developing competing products, procedures, and/or clinical solutions that may cause variability in our results.

Highlights of the strategic and operational advancements include:

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.

PRODUCT INNOVATION.

We continue to see growth from our most recent product innovations.

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 PRO-Mini ® devices and expect to launch both products in Europe later this year.

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.

CLINICAL SCIENCE.

We continue to invest in studies to expand labeling claims, support various indications for our products and gather and publish clinical data for therapies and procedures involving our products.

Key trials include:

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.

14 unchanged sentences

Results of Operations

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Three months ended June 30, 2026 compared to three months ended June 30, 2025

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of revenue:

9 unchanged sentences

Income (loss) from operations 9,665 6.3 (6,192) (4.5)

Other expense, net (132) (0.1) (554) (0.4)

Other income (expense), net (239) (0.2) 263 0.2

Income (loss) before income tax expense 9,426 6.1 (5,929) (4.4)

4 unchanged sentences

Three Months Ended

March 31, Change

June 30, Change

2026 2025 Amount %

7 unchanged sentences

Worldwide revenue increased 12.8% (12.4% on a constant currency basis).

In the United States, we saw a 14.9% increase in revenue driven by key product lines:

AtriClip ® FLEX-Mini and PRO-Mini devices for appendage management, cryoSPHERE ® MAX ™ probe for post-operative pain management and EnCompass ® clamp for open ablation.

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.

Additionally, we saw strong growth in most of our direct markets offset by distributor channels.

Revenue reported on a constant currency basis is a non-GAAP measure calculated by applying previous period foreign currency exchange rates, which are determined by the average daily exchange rate, to each of the comparable periods.

3 unchanged sentences

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.

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.

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.

Other expense.

Other expense consists primarily of net foreign currency transaction gains or losses and net interest expense.

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

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and as percentages of revenue:

Six Months Ended

Revenues Amount % of

Revenue $ 294,853 100.0 % $ 259,759 100.0 %

Cost of revenue 66,913 22.7 65,649 25.3

Gross profit 227,940 77.3 194,110 74.7

Operating expenses:

Research and development expenses 50,637 17.2 51,812 19.9

Selling, general and administrative expenses 167,112 56.7 154,444 59.5

Total operating expenses 217,749 73.9 206,256 79.4

Income (loss) from operations 10,191 3.5 (12,146) (4.7)

Other expense, net (371) (0.1) (291) (0.1)

Income (loss) before income tax expense 9,820 3.3 (12,437) (4.8)

Income tax expense 757 0.3 500 0.2

Net income (loss)

$ 9,063 3.1 % $ (12,937) (5.0) %

The following table sets forth, for the periods indicated, our revenue by product type and geography expressed as dollar amounts and the corresponding change in such revenues between periods, in both dollars and percentages:

Six Months Ended

June 30, Change

2026 2025 Amount %

Open ablation $ 79,965 $ 69,776 $ 10,189 14.6 %

Minimally invasive ablation 12,417 16,319 (3,902) (23.9)

Pain management 49,417 38,438 10,979 28.6

Appendage management 99,994 87,199 12,795 14.7

Total United States $ 241,793 $ 211,732 $ 30,061 14.2

Total International 53,060 48,027 5,033 10.5

Total revenue $ 294,853 $ 259,759 $ 35,094 13.5 %

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.

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.

Research and development expenses.

Research and development expenses increased $1,707 or 7.6%, driven by an $818 increase in regulatory filing and submission costs as a result of timing of product development and clinical initiatives and $738 increase in personnel costs, including share-based compensation.

Research and development expenses decreased $1,175 or 2.3%, driven by the $5,000 milestone payment for acquired in-process research and development (IPR&D) in the second quarter of 2025.

This decrease was partially offset by $1,619 increased regulatory filing and submission costs, $1,236 higher personnel costs, including share-based compensation and travel, and $803 increased product development project spend reflecting continued investment in our product pipeline.

Selling, general and administrative expenses.

Selling, general and administrative expenses increased $8,496, or 11.2%, driven by a $6,499 increase in personnel costs, including travel and share-based compensation, largely as a result of growth in headcount to support sales growth.

Additional spending related to meeting costs increasing $788 and marketing and training costs increasing $679 driven by expanded tradeshow and training activities.

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.

Other expense.

Other expense consists primarily of net interest expense.

Other expense consists primarily of net foreign currency transaction gains or losses and net interest expense.

Liquidity and Capital Resources

As of March 31, 2026, we had cash and cash equivalents of $146,165 and outstanding debt of $61,000.

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).

1 unchanged sentence

A small portion of our cash is held in foreign banks to support our international operations.

We had net working capital of $240,502 and an accumulated deficit of $413,095 as of March 31, 2026.

Consolidated Cash Flows - For the three months ended March 31, 2026 and 2025

Cash flows used in operating activities.

Net cash used in operating activities decreased $7,030 from 2025 to 2026, reflecting improved operating results of $6,855, driven by higher sales and improved operating margin.

We had net working capital of $263,615 and an accumulated deficit of $404,140 as of June 30, 2026.

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

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.

Cash flows used in investing activities.

Net cash used in investing activities increased by $2,171 from 2025 to 2026, due to a $1,671 increase in purchases of property and equipment and $500 in capital grant proceeds received in 2025.

Net cash used in investing activities improved by $1,725 from 2025 to 2026, due to the decrease of $5,000 for the 2025 acquired IPR&D milestone payment, offset by a $2,775 increase in purchases of property and equipment and $500 in capital grant proceeds received in 2025.

Cash flows used in financing activities.

8 unchanged sentences

Amounts available to be drawn from time to time under the ABL Facility are determined by calculating the applicable borrowing base, which is based upon applicable percentages of the values of eligible accounts receivable, eligible inventory, eligible liquid assets, less reserves as determined by the Administrative Agent, all as specified in the Credit Agreement.

The borrowings bear

interest at a rate per annum equal to, at the Company's election:

The borrowings 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) a term secured overnight financing rate (SOFR) plus an applicable margin.

As of March 31, 2026, the Company has borrowed $61,000, classified as noncurrent and had unused borrowing availability of $62,750.

Our corporate headquarters lease agreement requires a $1,250 letter of credit renewed annually and remains outstanding as of March 31, 2026.

As of June 30, 2026, the Company has borrowed $61,000, classified as noncurrent and had unused borrowing availability of $62,750.

Our corporate headquarters lease agreement requires a $1,250 letter of credit renewed annually and remains outstanding as of June 30, 2026.

For additional information on the terms and conditions, as well as applicable interest and fee payments, see Note 6 – Borrowings and Financing Obligation.

25 unchanged sentences

Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2026, there were no material changes to the information provided under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Form 10-K for the year ended December 31, 2025.

As of June 30, 2026, there were no material changes to the information provided under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Form 10-K for the year ended December 31, 2025.

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 2. Management’s Discussion and Analysis