AtriCure, Inc. Q3 FY2021 Earnings Call

Good afternoon and welcome to AtriCure's Third Quarter twenty twenty one Earnings Conference Call. My name is Catherine and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Marissa Bych with Gilmartin Group for a few introductory comments.

Thank you. By now you should have received a copy of the earnings press release. If you have not received a copy, please call 513-755-4136 to have one emailed to you. Before we begin today, let me remind you that the company's remarks include forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond AtriCure's control, including risks and uncertainties described from time to time in AtriCure's SEC filings. These statements include, but are not limited to, financial guidance and expectations, expectations regarding the potential market opportunity for AtriCure's franchises and growth initiatives, including CONVERGE and the adoption of the CONVERGE procedure, and future reimbursement. AtriCure's results may differ materially from those projected. AtriCure undertakes no obligation to publicly update any forward-looking statements. Additionally, we refer to non-GAAP financial measures, specifically revenue reported on a constant currency basis, adjusted EBITDA, and adjusted loss per share. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release, which is available on our website. With that, I'd like to turn the call over to Mike Carrel, President and Chief Executive Officer.

Thanks, Marissa. Good afternoon, everyone, and thanks for joining us today. We hope that you're well. Against a difficult backdrop driven by the pandemic headwinds, we delivered solid performance in the third quarter, reaching seventy point five million dollars in total revenue. This represents twenty-nine percent growth compared to the third quarter twenty twenty and a one percent sequential decline from our strong second quarter twenty twenty one results. We saw year-over-year growth across key product lines in the United States, including contributions from the continued addition of new pain management and hybrid therapy accounts. We were also pleased with the robust performance of our open ablation and appendage management franchises across Europe and Asia. As many of our peers have stated, the third quarter brought continuing challenges driven by the COVID-19 pandemic. We began the third quarter with a record sales month in July. In August and September, however, we began to see some impact from the surges in COVID cases and hospitalizations, along with hospital staffing constraints, which affected the industry broadly. While many healthcare systems have become adept at managing through COVID-related issues, there are few options to mitigate the shortages of healthcare workers, and we are not immune to these developments. However, the fundamentals of our business, as well as our twenty twenty one financial outlook, remain very much intact. Taking a step back, I would like to highlight our key growth initiatives beginning with our Hybrid AF therapy. In the second quarter, we received PMA approval of the EPi-Sense system as a result of our pivotal CONVERGE clinical trial. This achievement marks the only FDA approval for the standalone treatment of patients with longstanding persistent Afib, which represents approximately forty-five percent of all diagnosed Afib patients. We are pleased with our progress since receiving the PMA, having conducted several physician training programs, executed weekly mobile labs all over the country, initiated many new accounts, and expanded physician use within existing accounts. These early efforts are just a small step on the way to reaching the broad base of accounts and patients, and much opportunity remains. In addition to the activities noted, we continue to expand our hybrid sales force and add significant dedicated training resources. As a result, even with COVID-related headwinds, we are encouraged by the uplift in MIS ablation revenue in the United States every quarter and the continued progress in appendage management at the same time. As I mentioned, we have only started with establishing our goal of establishing the hybrid CONVERGE procedure as the standard of care for patients with the most complex and difficult-to-treat forms of Afib. It is worth repeating that we believe this is a multi-billion dollar annual opportunity, which should impact many tens of thousands of patients every year. Moving to our open franchise. Following FDA 510(k) clearance in late July, we recorded our first EnCompass device sales in the United States. Initial sales came from a limited launch as we work toward broader commercial availability later this year. The EnCompass Clamp is an innovative addition to our open ablation platform, providing a simpler and faster approach to ablating during open-heart procedures. As a reminder, our open ablation platform includes the Isolator synergy system, the first medical device to receive FDA approval for the treatment of persistent Afib in late twenty eleven. Even after a decade of market development and training since approval, we estimate that less than one third of cardiac surgery patients with Afib in the United States are treated today, and even fewer globally. We expect the EnCompass device, along with our legacy technology, to deepen our penetration of the cardiac surgery market over the next decade. There is a substantial addressable market for both our open and hybrid ablation platforms with hundreds of thousands of patients annually, representing billions of dollars. Complementing the ablation opportunity is our appendage management franchise. As many of you know, we have steadily expanded AtriCure product line through innovation, coupled with increasing awareness for the treatment of the appendage. Growth of our AtriClip franchise has outpaced our ablation products in recent years. We remain excited by the outlook for continued adoption of appendage management in surgical procedures as a result of the growing body of clinical evidence. Finally, turning to the cryoSPHERE probe, our dedicated device for managing postoperative pain in thoracic patients. Our unique technology uses a differentiated freezing method to block nerves from transmitting pain signals after thoracic surgery, providing a long-lasting form of pain relief for patients. Cryo Nerve Block continues to be one of our fastest-growing therapies, and we are very pleased with our growing account base. In the third quarter, we surpassed thirty million dollars in life-to-date sales of the cryoSPHERE probe in the United States, just two point five years after the initial product launch. This represents more than twelve thousand patients who have been treated with Cryo Nerve Block therapy since early twenty nineteen. More recently, we recorded our first cryoSPHERE sale in Europe. While we are proud of our progress, we believe the market for Cryo Nerve Block remains vastly underpenetrated, and we continue to increase investments in our dedicated commercial and education teams to drive therapy awareness and adoption. In closing, we continue to execute and are making progress in each franchise around the world. We see robust underlying demand from patients and physicians for the critical treatments that our products enable. We expect to end the year in a strong position for twenty twenty two and beyond, and we remain excited by the potential of our portfolio and the future for AtriCure. I will now turn the call over to Angie Wirick, our Chief Financial Officer, to discuss more detailed results for the quarter.

Thanks, Mike. Our third quarter twenty twenty one worldwide revenue of seventy point five million dollars increased twenty-eight point seven percent on a reported basis and twenty-eight point six percent on a constant currency basis when compared to the third quarter of twenty twenty. On a sequential basis, this quarter we experienced a decline of one point three percent in revenue from the second quarter. The sequential decrease is partially driven by normal seasonal variation in our business, but also impacted by the ongoing pandemic and staffing constraints that Mike noted. In the third quarter twenty twenty one, U.S. revenue was fifty-seven point five million dollars, a twenty-eight point seven percent increase in the third quarter of twenty twenty, reflecting healthy activity across product lines and promising growth trends despite reducing case volumes as the quarter progressed. U.S. sales of appendage management products were twenty-three point four million dollars, up thirty-four point three percent over the third quarter of twenty twenty, on strong AtriClip Pro V and Flex V product sales. U.S. sales of open ablation products, which include our Cryo Nerve Block business, were twenty-three point eight million dollars, up nineteen point four percent over twenty twenty. Sales of the cryoSPHERE probe alone accounted for six point two million dollars in revenue in the third quarter, up nearly ten percent sequentially. Finally, minimally invasive ablation sales in the U.S. reached ten million dollars, up forty-three point one percent from twenty twenty, showing the recovery in elective procedures from last year, as well as growth EPi-Sense device sales. International revenue totaled twelve point nine million dollars, up twenty-eight point five percent on a reported basis and up twenty-seven point nine percent on a constant currency basis as compared to the third quarter of twenty twenty. Rebounding activity in most countries in Europe accounted for seven point eight million dollars of third quarter revenue, a nineteen point three percent increase from the third quarter of twenty twenty, while Asia and other international markets contributed five point one million dollars in revenue, up forty-five point five percent from the third quarter of twenty twenty. Our gross margin was seventy-four point one percent, up roughly forty basis points from the same quarter in twenty twenty. The modest improvement in our gross margin this quarter reflects a blend of factors, while we experienced a more favorable product mix and the benefit of leverage from increased revenue, these gains were largely offset by an inventory management charge related to the LARIAT system and an unfavorable geographic mix in comparison to the prior year. Looking forward, while we are cautious with the increasing strain many suppliers are facing in the current environment, we expect to benefit from increased revenue and strong production volume. As mentioned in the prior quarter, we are making incremental investments to expand production capacity in support of our long-term growth and remain focused on key partnerships throughout the supply chain. Now, turning to operating expenses. Research and development spend and selling, general and administrative costs totaled sixty-one point two million dollars for the third quarter of twenty twenty one, up seventeen million dollars or thirty-eight point six percent over the third quarter of twenty twenty. The increase resulted mainly from personnel costs driven by the addition of headcount over last year and variable compensation programs reflecting top line growth. Travel spending returning to normal and expanding training and market activities as we launch our Hybrid AF therapy and continue to drive awareness across our platforms. Separate from these expenses, we reported non-cash adjustments driven by the aMAZE clinical trial results discussed on last quarter's call. Third quarter twenty twenty one operating expenses include a credit of one hundred and eighty-nine point nine million dollars from the reduction of the contingent consideration liability and an impairment charge of eighty-two point three million dollars related to the aMAZE IPR&D assets. Both adjustments reflect a change in the forecasted timing and probability of obtaining FDA pre-market approval for the LARIAT system and have been excluded from adjusted EBITDA and adjusted earnings and loss per share metrics. We had positive adjusted EBITDA of six hundred and ninety-one thousand dollars compared to positive adjusted EBITDA of four point two million dollars for the third quarter of twenty twenty. Basic and diluted net income per share was two point one five dollars, two point one one dollars respectively in the third quarter of twenty twenty one compared to a basic and diluted loss per share of zero point one one dollars in the third quarter of twenty twenty. The adjusted loss per share each period was zero point two three dollars and zero point one one dollars, respectively. Our balance sheet position remains solid and we ended the third quarter with approximately two hundred twenty-five million dollars in cash and investments. Now, as we move towards the end of the year, while we face headwinds from the impact of the pandemic and continued burden on the global healthcare system, we remain confident in our previous guidance of approximately two seventy million dollars to two seventy-five million dollars in annual revenue. As we look beyond Q4 and into twenty twenty-two with continued progress in each franchise, as well as recent product launches, our many tailwinds give us confidence in our ability to grow above historic rates for many years ahead. We continue to expect adjusted EBITDA to be a loss of approximately ten million dollars for the full year twenty twenty one as we invest in strategic growth drivers across the business. We are growing the AtriCure team and focusing on expanding education programs, continuing device and therapy innovation, and growing clinical evidence in support of all of our platforms. We also expect the adjusted loss per share for twenty twenty one to be approximately one point two zero dollars. At this point, I will turn the call back to Mike for closing comments.

Thank you, Angie. I would like to end the call by recognizing the team at AtriCure for their continued success. I’m impressed by the dedication and adaptability of our people, the high level of collaboration across our company, and the commitment and excitement for our mission and our future. I’m thankful for each and every one of our employees, and I know that together as a team, we will have the greatest impact on patients globally. With that, I will now open it up to questions. Operator?

Thank you. The first question comes from Robbie Marcus with JP Morgan. Your line is open.

Hi. This is Lily on for Robbie. Thanks for taking the question. Maybe just to start with a question on overall trends. Can you give us any color on how COVID trends played throughout the quarter and what you've seen so far in the first month of the fourth quarter? And second, what's assumed in guidance in terms of the recovery? Thanks.

Sure. I mean the trends we saw were that we had a record month of July as a business, and then we saw a combination of COVID and summer vacations in August. COVID had an impact on the September and October months. So we definitely saw that, but we did see some pickup a little bit in October, but it definitely had a lingering effect into the fourth quarter, much like what we're hearing from a lot of other companies about the impact of COVID. That's all baked into our guidance in terms of our thoughts. Everything that we know as of today is included in our guidance. We reiterated our guidance of two seventy and two seventy-five for the full year, and we're confident in that number.

Great. That's helpful. And then just a quick follow-up on CONVERGE. As you've been training doctors and onboarding centers, how long does it take for doctors to get comfortable with the procedure and come up the learning curve? And when do you think you could really start seeing an increase in procedure volumes? Thanks.

I mean, for a doctor to get really comfortable, it typically takes about three to five cases where they feel comfortable, and I'd say ten cases where they start to get really good at it. In terms of the inflection point, or impact, it's going to be continuous growth for the next many years to come. It will take a system about six to twelve months to really go through that process where they get trained, they start recruiting patients, they get their first patients in, they get comfortable with it, and they reach critical mass over time. You're starting to see some of those sites that started at the beginning of the year really start to get open and get more patients. Obviously, COVID had an impact, so it's tough to look past some of that right now, but I'd say you're going to start seeing continued growth into next year. It's one of the main reasons why when Angie talks about guidance, we mention that we are very comfortable that we will be able to grow above historical numbers. Looking before COVID, we were pretty consistently growing at fourteen percent to fifteen percent every year. Our seven-year CAGR was about that. We will grow faster than that for the foreseeable future at this time.

Great. Thank you.

Thank you. Our next question comes from Matthew O'Brien with Piper Sandler. Your line is open.

Afternoon. Thanks for taking my questions. Just to follow-up a little bit on the question there. Mike, you're in inpatient procedures for CONVERGE. It's a little bit more of an involved procedure versus other EP cases out there. So I'm just wondering if the staffing shortage overly affects AtriCure versus others in this space. And then what kind of slowdown that may cause as new centers are building here towards the end of this year into next year as a result of the labor side and the COVID side of things and what you can do internally to offset those headwinds you may be facing versus others in this space.

It's a really fair point, Matt. I mean, you're correct in stating that, in general, being an inpatient for a longer period of time means there are more staffing concerns for cardiac surgery. We would be remiss if that wasn't the case. That being said, we've also got a new label that shows a demonstrable benefit of doing this procedure, and you counter that with the fact that we're adding a lot of net new sites. Those sites are now getting their programs up and running, they want to build momentum, and they want to see what that looks like. It will have some impact, and we've obviously baked that into our revenue guidance for the remaining portion of this year, but it does not diminish my confidence long-term in our ability to grow this business as we look at twenty twenty-two, twenty twenty-three, and twenty twenty-four. We're confident that we will grow at a faster pace than we have historically grown, and a lot of that is going to be driven by strong growth expected from the CONVERGE platform.

Okay. That's really helpful. And then question for Angie, just on the gross margin side. It looks like it's probably more a function of just geographic mix more than anything, as far as the slight pull back in gross margins here. I'm just curious as far as that metric as we head into twenty twenty-two? And then you're still spending pretty aggressively on R&D and I think that's important for the company from a developmental standpoint and clinical trial standpoint. But given now that LARIAT is pretty much out of the picture, is that an area of leverage you should expect next year for the company and maybe a little bit on the SG&A side as well? Thank you.

Yes. Starting with gross margin, the biggest impact this quarter was a charge on the LARIAT inventory reserve. We did have some unfavorable geographic mix, but it was offset by some favorable product mix, like EPi-Sense and Flex V and Pro V clips, which are high-margin products for us. When you think about leveraging the P&L, we are not at a point where we are giving guidance long-term. If you look at this particular quarter, we saw a downturn in R&D expense as a percentage of revenue. It's a function of where projects are at in their life cycle. Longer-term, we expect that to return to historical levels, and we would expect some leverage off of SG&A. I say that, but I also want to remind investors that we're making investments to fuel our growth. We continue to build out our commercial teams, as well as training and education programs as we're launching our Hybrid AF therapy, Cryo Nerve Block, and expanding other products.

Great. Thank you.

Thank you. Our next question comes from Danielle Antalffy with SVB Leerink. Your line is open.

Hi, good afternoon, guys. Thanks so much for taking the question and congrats on a good quarter despite all the headwinds. If I could just ask a question on what you're seeing as it relates to the logistics around CONVERGE? And whether that is complicated, I think, maybe I'm following up on Matt’s question a little bit here. But how do you think about that in the hospital labor shortage? Is that a procedure that's maybe more at risk from a hospital labor shortage perspective, or am I thinking about that incorrectly? And I do have one follow-up.

As I mentioned a little bit, Danielle, sure there's an impact when you've got a labor shortage and somebody in the hospital for longer. So there's no question that there's an impact. However, it's countered by the positive of having a brand new procedure that hospitals are implementing to treat patients they couldn't before, which enables them to save time on some of their other procedures in EP and time spent in the cat labs. While theoretically, yes, there is an impact, I'd say it's largely overcome by the fact that they want to get these programs up and running. We're really at that beginning stage of getting them. We've seen continued growth in that franchise, and this quarter we had our best EPi-Sense quarter. So we are in a strong position overall, and we’ll continue to see volumes increase despite the labor shortage.

Okay. That's helpful. And then my follow-up question is really on the commentary around the above-historical growth. I mean, that's helpful color. I was wondering if you could put a little bit more context around that as far as how to think about twenty twenty-two and then beyond and if it's sort of a step function or more gradual acceleration.

I think that's a fair question. We're not ready to give guidance for twenty twenty-two that is more specific at this time. We will definitely do that at the beginning of next year. I don't want to give more than what we've already stated, which is that we anticipate growth not just next year, but for many years to come above those growth rates. That’s something you can expect from us. We will get into some more specifics in January. I know everybody wants that information now, but it will be more prudent to wait and see how the year concludes and then provide a broader view for twenty twenty-two in January.

Thank you. Our next question comes from Rick Wise of Stifel. Your line is open.

Hi. This is actually John on for Rick. Thanks for taking my question. First, you mentioned earlier on the call the training of doctors for CONVERGE. And I'm just wondering if you could quantify how that process is going, given COVID and if you can give any more color on that.

Yes. We have multiple angles for training. The first piece is the didactic training we've had, I think up to five different didactic trainings, which are typically like a Friday-Saturday training. They basically come to a city, receive that training, and then they go through several EPs and surgeons who give the course, generating dialogue and discussion that fosters a better understanding. We usually conclude those courses with a wet lab or some kind of lab afterwards. In addition, we have mobile labs—currently two, moving to three—that travel across the country. Those are busy every week; each one does about two labs a week. They're set up in either hospital parking lots or nearby local parking lots. EPs and surgeons come to that, where we provide a shorter version of the didactic and then they get hands-on with the product. Those labs are fully booked through the early part of next year, and we continue to train people regularly. So those efforts are going extremely well. We do use those labs mostly today for hybrid but will also include the EnCompass launch as we add more sites next year.

Thanks. That's helpful. So then just one more follow-up from me. AtriClip continues to be a big performer for you guys. We're curious what else you kind of have in the pipeline? How you're thinking about that moving forward? Any developments or potential products that could grow at that rate?

If you look at the franchise portfolio, we have three major drivers of accelerated growth. The first one is on the hybrid side, with CONVERGE and EPi-Sense growing at a great pace. We anticipate creating the standard of care here over the next five or so years for longstanding persistent patients. There's a huge market opportunity, as many patients can benefit from this treatment. Number two is the Cryo Nerve Block side, which is also growing quarter-over-quarter. We have more than doubled the size of our sales team over the last year, continuing to gain access and adding clinical support to that team. This has been a very fast-growing segment for us. I mentioned in the call that we are at about thirty million dollars in life-to-date sales, and Angie discussed six point two million dollars in this quarter. So, you can see it's a strong contributor for us. Third, we believe that the EnCompass Clamp combined with recent reimbursement changes will not necessarily accelerate growth to the same degree but will allow for strong growth within our open franchise. Typically, only a third of patients on the table are treated today, and we believe that number should be much higher. With EnCompass and several other initiatives, we can impact that area and ensure continued solid growth in our open franchise. On the AtriClip side, while it hasn't grown as fast, we believe we can further leverage that area. We will conduct the Atlas trial, for which we've already received feedback from the FDA. This large trial will encompass six thousand five hundred patients across one hundred and fifty sites globally for patients who do not have Afib but are at high risk for stroke. We’re pursuing a stroke label in this trial. We’re in the early stages of feedback with the FDA and hope to secure approval to move ahead next year. We believe this will have a significant impact not just in the U.S. but globally, within our cardiac surgery franchise.

Thanks for taking my questions.

Thank you. And our next question comes from Mike Matson with Needham & Company. Your line is open.

Good afternoon. Thanks for taking my questions. I wanted to ask about the training you're doing for CONVERGE, specifically getting interest from EPs and surgeons on board with the idea of CONVERGE. Have you had any challenges there where you have a surgeon who wants to do it, but the EP is not cooperating or vice versa? And how do you manage if that happens?

Fortunately, we're not seeing a lot of that. I'd say the area we see mostly is that we've got EP interest everywhere. There is a significant amount of interest from EPs. The challenge lies in finding a surgeon who has the time to dedicate themselves to this specialty. It’s important to match a surgeon who will be a good fit with the EP, as they need to collaborate effectively. We’re not getting much pushback; it’s more about getting them operational and getting administration and patient flow figured out, which is the biggest lift, rather than interest itself.

Okay, thanks. That's good to know. And then just the EnCompass Clamp. I know it's early days for the launch, but I was wondering if you could share any kind of feedback you've received from the surgeons that are using it?

Yes, the feedback has been fantastic. It’s reduced the time surgeons need to spend on the ablation, and we’re achieving excellent ablation lines during testing. We’ve had very good results so far; it’s essential to gather learnings to ensure we train others safely when we bring it to the market. So, the feedback has been very positive, and we plan for a full launch in the early part of next year. The insights we’ve received have been very informative for enhancing our training.

Thank you. And we have a question from Marie Thibault with BTIG. Your line is open.

Thank you so much for taking the question and congrats on a strong quarter. I'll ask one more here on CONVERGE. Sort of forward-looking, I wondered if you could tell us how many new sites you were able to add since the launch? And from these new sites, are you hearing anything about how they plan to market the procedure? We've heard feedback that this could become something that sets hospitals apart in their regions. So I was curious about what you're hearing from some of your newer customers on that front?

Yes. It’s a fair question. Everyone wants to know the number of new sites, but we aren’t ready to disclose that number yet. We don’t want people to assume a specific number of new sites because in some regions, we may be going deeper with our established accounts rather than adding new sites. So I can’t provide a misleading figure for you guys to factor into your models. Revenue will be the key driver here, and we are adding net new sites in excess of our expectations at this point. We are also securing repeat customers, which is helping us refine workflows. Overall, that aspect is going well. Regarding marketing plans, we’re starting to see hospitals roll out proactive campaigns to their referring cardiology community. Just this week, I saw one from the Cleveland Clinic highlighting their procedure in their internal newsletter that goes out to the entire cardiology group, not just surgeons and EPs, effectively demonstrating that they’re promoting this new procedure. They’re also initiating internal trainings and classes for their cardiology community. While we’re still building a foundation for training and ensuring they can execute it effectively, we expect the marketing to ramp up significantly in the six to twelve months following adequate training.

Okay. And well understood on the new site metric; I had to try. Let me ask my follow-up then to Angie. Angie, you mentioned working on building up production volumes. I'm curious if you can provide any more detail on the supply chain and whether there are any specific products or components we should be cautious about related to supply chain issues?

Yes, it's a good question, Marie. I'd say the caution extends broadly. From what we've heard from our peers in the industry, we are also hearing of the pressures facing suppliers. I wouldn’t say any single product gives us concern; it’s more about the macro environment in which they’re all operating. That said, we are looking forward to achieving a strong future. We are expanding capacity to meet that demand and must continue nurturing strong relationships with our partners in the supply chain.

Thank you. And we have a question from Suraj Kalia with Oppenheimer & Company. Your line is open.

Sure. Good afternoon, everyone. Mike, Angie, can you hear me all right?

We can.

Perfect. Hope everyone is safe and healthy. Hey, Mike. So two questions. One on CONVERGE, is the discussion in the field all encompassing on persistent Afib, or are you seeing stratification on longstanding persistent Afib? And I’m especially curious how OUS perceives what's going on with CONVERGE?

Yes. Most of the conversations we're having—actually, all of them—are focused on longstanding persistent Afib. That's the primary focus. It differentiates us, and that's the data we've leveraged for our labor force. Our team is well-trained to emphasize longstanding persistent Afib, and that's where we've received positive feedback from EPs who recognize the effectiveness of the procedure in these complex cases since catheters typically do not provide H benefit. It’s a similar situation internationally; despite the broader label, the data on longstanding persistent Afib are so compelling that that’s where attention is directed. It’s akin to how Tavr initially targeted a high-risk patient population before advancing wider indications; the same will evolve here.

Fair enough. And my second question, and please forgive me if I missed it—I was juggling between two calls—is the Atlas IDE going to be structured around post-surgery Afib stroke risk? I’m curious why pursue this route rather than potentially focusing on de novo, standalone Afib patients on Coumadin? The reason I ask is that most major studies on post-surgery stroke incidents indicate the cumulative incidence for patients with Afib and non-Afib are closely aligned.

Sure, that’s a great question, Suraj. So here’s the context: we have been studying this for a long time. The focus is on patients who do not have atrial fibrillation and are undergoing cardiac surgery. This group represents about two-thirds of cardiac surgery patients who don’t initially have Afib but face a high probability of developing it later in their lives. This trial is centered on providing patient-centric care. When the appendage is open during surgery, it’s an optimal moment to secure closure, protecting against future Afib and the associated risks of stroke. We’ve analyzed our previous feasibility trial data, which indicated significant benefit in reducing strokes, although it was not statistically significant. The published research shows a significant reduction at one year, with even larger reductions observed at three years for this patient cohort. Although the trial is long, we believe the patient population is substantial and the potential impacts on care and stroke prevention are significant, making this a worthwhile endeavor. Additionally, while the standalone idea you mentioned is not mutually exclusive, we haven’t been able to structure a trial for that population that allows for sufficient enrollment historically. However, we will continue to consider it moving forward; it’s just not a top priority at this moment. We believe the non-Afib cardiac surgery population offers a great opportunity right now, and we think this trial’s design is a solid approach for addressing it.

Thank you. And I'm showing no further questions at this time. I'd like to turn the call back to Mike Carrel for closing remarks.

Well, great, everyone. We really appreciate you joining the call today and all the questions. We look forward to speaking again in the early part of next year. Have a great rest of the year. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.