AtriCure, Inc. Q3 FY2025 Earnings Call

Good afternoon, and welcome to AtriCure's Third Quarter 2025 Earnings Conference Call. This call is being recorded for replay purposes. I would now like to turn the call over to Marissa Bych from the 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) 644-4484 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 expectations and guidance, expectations regarding the potential market opportunity for AtriCure's franchises and growth initiatives, future product approvals and clearances, competition, reimbursement, and clinical trial outcomes. 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 constant currency revenue, 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 would like to turn the call over to Mike Carrel, President and Chief Executive Officer.

Great, and good afternoon, everyone. Thank you for joining us today. We had a very strong third quarter with total revenue of $134 million, reflecting a 16% increase year-over-year. Our growth was driven across key franchises globally, demonstrating the expanding adoption of our therapies and breadth of market opportunities. We also substantially improved profitability and cash generation with nearly $18 million of adjusted EBITDA and over $30 million in cash generated in the third quarter. Overall, our revenue growth and profitability exceeded expectations for the quarter, and we will once again raise guidance for the year. Product innovation and clinical science initiatives continue to flourish at AtriCure, and that is evident in the success of our recent product launches. The AtriClip FLEX-Mini and cryoSPHERE MAX devices are propelling outstanding growth in appendage and pain management in the United States. The launch of our EnCompass Clamp is driving accelerated growth in Europe while continuing to fuel steady growth in the United States many years after launch. And we are building on surgeon interest in this product with our PFA platform development program and further expanding our market opportunity with the initiation of our BoxX-NoAF clinical trial. Additionally, our cryoXT device, launched this quarter, will set a new standard for managing pain in lower limb amputation procedures. Each initiative reflects our commitment to delivering innovative therapies to address unmet clinical needs for patients around the world. Now on to updates from each of our franchises. Starting with appendage management, where worldwide revenue grew over 20%, continuing the acceleration realized in the first half of 2025. This is a direct result of increasing adoption of our AtriClip FLEX-Mini and PRO-Mini devices. Both devices leveraged our third-generation AtriClip platform technology, featuring a smaller profile clip, which improves visibility in procedures. These devices are the smallest surgical LAA implants available, and build on more than a decade of outstanding results for the over 700,000 patients treated on our AtriClip platform. Related to the AtriClip, early in the third quarter, we completed enrollment of over 6,500 patients across 137 sites globally in our landmark clinical trial, LeAAPS. The success of enrollment is a reflection of the strong interest from trial investigators, of which over 500 surgeons participated and are now focused on patient follow-up. As most of you know, the LeAAPS trial is designed to evaluate the use of AtriClip devices for stroke prevention in cardiac surgery patients who do not have prior Afib diagnosis. This is a significant underserved patient population with more than 70% of the nearly 2 million patients who undergo cardiac surgery annually not having a prior Afib diagnosis, and we are very excited about the potential ahead. While we await the results of the trial, we are driving physician awareness and expanding access to AtriClip devices globally. To that end, we are pleased to announce the recent approvals of our AtriClip Flex-V, PRO-V and FLEX-Mini devices in Japan. In addition to the groundbreaking clinical evidence from LeAAPS, we intend to stay leaders in this market with continuous innovation and have turned our research and development efforts towards delivering the next generation of AtriClip devices, and we look forward to sharing our progress over the coming year. Within our ablation franchises, open ablation growth accelerated to over 18% for the quarter. Sales of our EnCompass Clamp continue to drive growth in the United States, and the launch in Europe boosted our international results. As I commented last quarter, the durability of the EnCompass Clamp's growth is a clear testament to our ability to deliver meaningful and consistent innovation, providing clinicians with effective and time-saving solutions. We expect to further advance concomitant ablation procedures with our platform development of an EnCompass Clamp enabled with PFA. We are making progress with robust preclinical testing and expect first-in-human use over the coming months. Beyond technical innovation, we are also moving forward with our BoxX-NoAF clinical trial and are excited to share that the first patient was treated. The BoxX-NoAF trial is another foundational study at AtriCure, aimed at reducing the onset of postoperative Afib in cardiac surgery patients who do not have a pre-existing Afib condition. This trial will significantly expand the opportunity to use our ablation technologies in this broader patient population, multiplying our cardiac surgery market opportunity overall. Adding to the momentum from our LeAAPS trial, we believe BoxX-NoAF will transform the standard of care in cardiac surgery towards preventative approaches. In our minimally invasive hybrid therapy, market dynamics remained challenging in the U.S. due to increased adoption of PFA catheter technology. Nonetheless, we continue to see substantial unmet need for patients with long-standing persistent Afib and believe that our hybrid AF therapy is uniquely positioned to address this need. Finally, turning to our pain management franchise, which grew 28% in the quarter and was driven by sales of our latest product innovations, the cryoSPHERE MAX and cryoSPHERE+ probes. These product launches have shown the value of reducing procedure times, allowing us to increase market penetration in thoracic surgery and gain traction in the sternotomy market. Another reason for optimism in our pain management business is the launch of cryoXT, which improves recovery and quality of life in patients following extremity amputation. Feedback already from surgeons using the cryoXT device has been encouraging. And we are even more excited by the reports of rapid patient recovery in the days following the procedure. As is the case with new therapy development, it will take time to ramp the cryoXT use. But we are confident that the benefit for patients, physicians and hospital economics are significant. We recently launched the vanish registry to track patient outcomes with cryoXT, and expect this data to demonstrate acute and phantom limb pain reduction with our Cryo Nerve Block therapy in patients undergoing extremity amputation. CryoXT unlocks a meaningful expansion opportunity in pain management and is another example of our ongoing commitment to innovation across all of our franchises. Going forward, we will also continue to invest in comprehensive clinical and economic data to support the value of Cryo Nerve Block therapies. As non-opioid pain management becomes an increasing priority across health care, these efforts are helping drive broader awareness and adoption. In closing, I want to express my gratitude to our entire AtriCure team for another successful quarter. Your work demonstrates an unrelenting focus on patients. We are executing well on our growth and profitability objectives, including record cash generation this quarter, providing a strong foundation as we end the year and go into 2026. I am confident that our shared determination to deliver exceptional patient outcomes and executing on our strategic priorities will transform standards of care in each of our markets. With that, I'll turn the call over to Angie Wirick, our Chief Financial Officer. Angie?

Thank you, Mike. Our third quarter 2025 worldwide revenue of $134.3 million increased 15.8% on a reported basis and 15.1% on a constant currency basis when compared to the third quarter of 2024, reflecting healthy adoption across key product lines and markets. On a sequential basis, we experienced normal procedure seasonality with a 1.4% decline from the second quarter to the third quarter of 2025. Third quarter 2025 U.S. revenue was $109.3 million, a 14.5% increase from the third quarter of 2024. While we experienced a decline in our minimally invasive ablation sales to $7.4 million for the quarter, all other U.S. franchises drove robust growth from the continued adoption of our innovative technologies. Open ablation product sales in the U.S. were $35.6 million, up 16.3% over 2024, driven by expanding use of our EnCompass Clamp. Through the third quarter, total accounts purchasing Encompass reached 740 this year, surpassing the 700 accounts purchasing during the entire fiscal year 2024. U.S. sales of appendage management products were $45.4 million, up 21.5% over the third quarter of 2024, led by ramping adoption of our recently launched AtriClip FLEX-Mini device. Growth in open LAA devices was over 26% for the quarter, while our minimally invasive LAA devices were up slightly on conversions to AtriClip PRO-Mini, which launched earlier this year. Finally, pain management product sales were $20.8 million, up 27.7% over the third quarter of 2024, reflecting increasing application of our cryoSPHERE MAX and cryoSPHERE+ probes, primarily in thoracic procedures. International revenue totaled $25 million, up 22% on a reported basis and 17.9% on a constant currency basis as compared to the third quarter of 2024. European sales contributed $15.2 million in the quarter, representing 24.2% growth. Sales in Asia Pacific and other international markets grew 18.8% to $9.8 million from the third quarter of 2024. Our gross margin was 75.5%, an increase of 59 basis points from the third quarter of 2024, driven primarily by more favorable product mix globally, stemming in part from new product launches in the United States. Operating expenses for the quarter totaled $101.1 million, an increase of $6.9 million or 7.4% from the third quarter of 2024. Research and development expenses rose 9.2% from the third quarter of 2024, reflecting a slower pace of spending in the quarter as we transition between projects after completing enrollment in LeAAPS and multiple new product launches over the last 12 months. SG&A expenses increased 6.8%, well below revenue growth for the quarter, demonstrating continued leverage as we further scale our operations. As a result of our strong revenue growth and disciplined approach to investing, we recognized $17.8 million in adjusted EBITDA, roughly $10 million above the third quarter of 2024. We expanded our adjusted EBITDA margin to 13.3% for the quarter, showing continued progress throughout 2025 and achieving profitable growth. Our basic and diluted net loss per share as well as the adjusted loss per share was $0.01 in the third quarter of 2025 as compared to $0.17 in the third quarter of 2024. Our balance sheet continues to strengthen as we ended the third quarter with $147.9 million in cash and investments, representing positive cash generation of $30.1 million for the quarter. This quarter, we had a one-time cash inflow of approximately $6 million from a sale-leaseback transaction as we began the expansion of our Ohio campus. We continue to expect positive cash generation in the first quarter, further elevating an already sound capital position. Now turning to our outlook for the remainder of the year. We now expect to achieve approximately $532 million to $534 million in full year 2025 revenue, reflecting approximately 14% to 15% growth compared to 2024. We are confident in the long-term growth trajectory for the large underpenetrated markets we serve globally. Year-to-date, gross margin is pacing 20 basis points above 2024 due to shifting product mix. We now expect our full year 2025 gross margin to be slightly higher than 2024 with the potential for varying impacts from geographic and product mix. Next, our priorities for capital allocation continue to focus on cultivating future catalysts for our business through meaningful investments in clinical science, product development, and therapy awareness. While we make these investments, we are also committed to driving expanded profitability. With that in mind, we are raising our positive adjusted EBITDA outlook to approximately $55 million to $57 million for the full year 2025, corresponding to an adjusted loss per share of approximately $0.23 to $0.26. I would also like to thank our extended AtriCure team for driving exceptional overall financial performance this quarter. As we make great strides in our mission to reduce the burden of Afib and postoperative pain, we are meaningfully improving the sustainability of our business through continued revenue and margin expansion. At this point, I will turn the call back to Mike.

Thank you, Angie. Our third quarter performance, underpinned by strong revenue growth and increasing profitability, highlights our team's persistence and commitment to our patients, partners, and our shareholders. I'm especially proud as we celebrate AtriCure's 25th anniversary this week. These same values of patients, people, and partners have guided our company over the past 2.5 decades, building to the incredible opportunity that sits in front of us today. Our trajectory is truly exciting, and I look forward to sharing further progress as we end the year and begin 2026. With that, we will turn it over to questions.

Our first question comes from John Young with Canaccord.

Mike and Angie, congrats on a great quarter. First, I just wanted to ask on the CMS proposal for ablations to possibly move into the ASC setting. Do you believe that the decrease in strain on hospital cath labs can actually lead to a rebound in the EPi-Sense business?

That's a great question, John. I'm not sure that will significantly impact the overall EPi-Sense business since that's not really our main focus. However, it should certainly enhance efficiency in the cath labs. What will really drive the EPi-Sense business is the situation where patients do not respond to PFA after trying one or two different techniques with various catheters. At that point, they will seek alternatives for treating those patients after exhausting options with the existing catheters. Currently, we're observing some advancements at several sites, where they are starting to refer certain patients, although it's not enough yet to significantly boost revenue. Nonetheless, we are noticing this trend with non-responders, especially after they've typically gone through two different catheter ablations. This will be a more telling indicator for us than the changes in the ASC.

Is there any way to quantify the opportunity in Japan given those approvals that you got there?

Yes. Right now, I mean, there's about 40,000 or so cardiac surgeries in Japan in totality. So obviously, with the LeAAPS trial and others, you've got the possibility of getting that entire area to cover that. Today, we don't sell that many clips. We do have our AtriClip on the market today. We're the leading player in the market relative to that. And obviously, now bringing in our newer technology, hopefully, will help accelerate that overall. We don't anticipate getting any revenue in the near term from it as we kind of prep the market over the course of the next 6 months. But we did just get the approval. We actually got it earlier than we expected and we'll be rolling it out sometime next year.

Our next question comes from Lilly Lozada with JPMorgan.

Maybe I'll start with one on open and then I have a follow-up on guidance. In the open business, 19% growth is really impressive and well ahead of what the segment had done historically. Obviously, EnCompass has done really well, but what do you think is driving the acceleration at this point? I know you said you've already basically seen full conversion from the legacy product over to EnCompass and that it's really adoption in new accounts and CABG doctors who historically hadn't been customers that have been driving growth. So where do you think you stand in penetrating that population? And how long do you think we can see this level of growth in the open business?

You made a great point. Lilly, the answer to that question is mainly about CABG patients, as those surgeons have not historically performed ablations on this group. They tend to avoid getting behind the heart, as we've previously discussed. Currently, we are witnessing a growing trend of surgeons starting to perform ablations who previously did not. We believe that EnCompass has significantly contributed to this change by making the technology easier to use and cutting approximately 30 minutes off the procedure time. This has greatly enhanced both the ease of use and the speed of performing successful ablations. Right now, we remain significantly underrepresented in the CABG market; we're approaching around 10% of CABG patients with Afib receiving treatment. CABG patients are generally those who often experience post-operative Afib. Additionally, with BoxX-NoAF, we see an even larger opportunity. We're optimistic about quickly enrolling our first patient in that study. We have a successful track record with LeAAPS and will also expedite enrollment for this, aiming to achieve results in the coming years.

Yes. Maybe one thing to add, Lilly, on the growth. It was a little over 16% in the U.S. in our open ablation franchise and 26% in our international business. A big part of that was the uptick that we're seeing on adoption in Europe for our EnCompass Clamp, where our European open growth was over 30% for the quarter. So I think we're excited, obviously, for the long-term prospects here, as Mike said, seeing additional adoption and treatment within CABG patients in particular.

Just a clarification on guidance, on profitability specifically. You put up really nice results on adjusted EBITDA. So first, can you talk a bit about the strength that you're seeing from a margin perspective? And second, guidance, I think, implies a sequential step down on adjusted EBITDA. So what's driving that? Is that just conservatism? Or is there something else at play in the fourth quarter that we should be thinking about?

Sure. To start with margins, we experienced some strength in gross margin this quarter due to a favorable mix, partly from our international business with distributors. Our new product launches are also contributing positively to margins as they grow in proportion to overall revenue. Additionally, we are beginning to see efficiencies from our manufacturing, particularly with the EnCompass Clamp, which we mentioned a few quarters ago. This is reflected in our numbers. On the operating expenses side, we had lower R&D spending this quarter as we transition from our LeAAPS clinical trial, which began enrollment in the first quarter, to ramping up our BoxX-NoAF trial. This trial will increase our spending as we move into the fourth quarter, which is factored into our fourth-quarter guidance, along with continued leverage in SG&A. Overall, I am pleased with the progress we've made this year and expect to continue making strides each quarter. While we are slightly conservative on the bottom line, we are also starting to increase some R&D initiatives in the fourth quarter.

Our next question comes from Marie Thibault with BTIG.

I wanted to talk a little bit about the appendage management business. Noticed that this is another quarter of high 20s growth in the Open Clip segment of that business. I wanted to understand, I think the majority of this is driven by a volume uptick. Just how sustainable is some of this high 20s growth? FLEX-Mini, how far along would you say we are in that rollout? Just some understanding of what that segment can do going forward.

We think there's a tremendous opportunity. I'm not going to commit to any specific numbers. But from an overall market dynamic standpoint, we're still in less than 30% of all sites in the United States with that product today. So we feel like there's a lot of upside just getting in sites, let alone getting to all the physicians that could use them at each one of those sites in addition to being used on a lot of patients. So we feel like there's a lot of upside in that opportunity, not to mention the longer term with the LeAAPS trial and hopefully expanding the market opportunity in general. So we think that there's a great deal of opportunity without giving specifics on like what each quarter revenue growth is going to look like, but the opportunity is very large there.

I was just going to add, Marie, from a revenue contribution, FLEX-Mini was around 30% of our U.S. Open Clip growth or Open Clip revenue for the quarter. Obviously, continue to see really nice uplift each quarter following launch and a long runway, as Mike said.

Yes. Okay. Another sequential uptick. Great to hear. And then I guess a follow-up on the adjusted EBITDA metric. And my question is more kind of focused on the long-range plan that you set out earlier on that metric. Clearly ahead of schedule on those goals. So how would you think about the cadence now, the trajectory, where this metric can go very long term?

Thanks, Marie. At this point, we're not ready to guide for 2026 yet. We are extremely pleased with the progress that we're making on the bottom line and the trajectory that we're on. I would expect continued improvement as we operate into 2026. I think relative to our LRP metrics that we put out at our Analyst and Investor Day earlier in the year, we are ahead of schedule. And our goal all along, both top and bottom line is to continue to outperform.

Our next question comes from John McAulay with Stifel.

First one for me, I just want to sort of follow up on Lilly's question about the fourth quarter. In terms of EBITDA, I understand the reasoning typical sort of conservatism for the step down. I just wanted to get a better sense of revenue. It seems like sort of 12% implied in the fourth quarter. We've been doing mid-teens all year. Just any dynamics in the fourth quarter we should be thinking about puts and takes for performance there?

John, I'd say we're really confident in the guide for the fourth quarter and for the full year. It's worth repeating our philosophy around guidance, which is to put numbers out there that we feel really confident in achieving with a pathway to beating. So the totality of our business, you can see almost every area is firing on good cylinders here. Hybrid, we will expect continued softness, but that's a very small portion of our business overall. So just pleased with the trajectory there, really along the philosophy of our guide for the year. In terms of comps, fourth quarter last year, you did have a couple of the new product launches hitting there, saw nice results overall, but that's really the only thing to take into consideration when you think about the comps for 2024.

One follow-up. Just curious, I may have missed it. I didn't see anything specifically calling out in the press release. But any update on the PFA program, timelines there, progress there? Just be curious to know next steps and what we should be looking ahead for.

Yes. On the PFA, we've done all the preclinical testing on our products at this point. And we are going into first in human by the end of this year, early part of next year. And then the next step after that, as we talked about the Analyst Day, is to go into clinical trials likely in the early part of 2027. And so no change on that. And we've made great progress on that front and are getting really, really good results in all the work that we're doing.

Our next question comes from Mike Matson with Needham.

Mike, Angie, this is Joseph standing in for Mike. I have a few questions regarding pain management. Firstly, is cryoXT currently in a limited launch? I'm not sure if that was mentioned in the prepared remarks, or is it more of an aggressive launch based on the success of + and MAX? Will the pain management growth for that product contribute in 2025? Additionally, how much of the pain management portfolio is available in Europe?

Sure. Regarding the XT launch, I wouldn't classify it as a limited launch, but it is definitely a very focused launch at this moment. Therefore, we don't expect significant contribution right away. Generally, we begin to see substantial contributions about 3 to 6 months after a launch, once we've worked through the initial stages, visited sites, and achieved success that we can build on. So, while you might consider it limited, we don’t refer to it that way internally. We don’t expect much revenue this quarter, but we believe it will be a meaningful contributor to our overall business in 2026. As for Europe, we have our cryoSPHERE available there, and it is being utilized across Europe and also in Australia.

I'll just ask another one on pain management. I did see a video on AtriCure's website. I guess this was on XT just interviewing a surgeon. And he said this quote that just caught me. I'm just kind of curious you guys' opinion. He said, utilizing Cryo Nerve Block for 10 to 15 minutes can add a lifetime of benefit to the patient and the absence or need for secondary procedures. So obviously, it seems like a very positive comment. I'm just kind of curious what kind of discussions are you having physicians or maybe physicians having with each other or their own colleagues to look for alternatives to opioids or reduce opioid use? What are you hearing from them?

What we're observing in the market is notable. The physician mentioned the significant benefits compared to our Afib franchise; even if Afib isn’t resolved immediately, there are lasting effects. With pain management, patients recover much faster and experience less pain in recovery units. It's impressive to see. For instance, in an amputation case, patients can start walking sooner, have prosthetics fitted quicker, and leave the hospital earlier without immediate post-surgery pain. This illustrates how cryo nerve blocks can assist. Furthermore, the physician, an early adopter in this field, notes that he is not only alleviating initial post-operative pain but also addressing longer-term phantom limb pain. We are conducting studies to examine these outcomes and plan to publish our findings.

Our next question comes from Danielle Antalffy with UBS.

I have just two questions. First, Mike and Angie, it seems we've seen several years of mid to high teens growth in open ablation. Can you discuss the sustainability of this growth? I know you covered it during your Analyst Day. What factors are crucial for maintaining this growth? Is it new modalities like PFA, training more surgeons, improvements in same-store utilization, or advancements in products like EnCompass? It’s been a few years, and the momentum doesn’t appear to be slowing down.

Yes. I mean the biggest thing right there, quite frankly, is awareness for the product because EnCompass right now, we have the products today. That's what's going to drive the overall growth, both in Afib patients. And then as you look out longer term, like we talked about at our Analyst Day in the non-Afib patients as well. We think that prophylactic treatment to reduce post-op Afib as with this clinical trial we just kicked off is going to have meaningful benefit and be helpful with the existing technology we have today. So the technology works incredibly well. It's very fast to utilize it and get a robust box lesion and then you add the AtriClip to it, and it's incredibly robust from that standpoint. We're already seeing papers get published that show incredible results with that BoxX and the box lesion. The BoxX being the box, and then the X being the exclusion of the appendage, which is exactly what we're seeing in there. So the two big things right now are awareness within the community that this works and is incredibly robust and more papers out. And two is expanding that opportunity for post-op Afib patients because that obviously more than doubles, if not triples, the overall patient population. So that's really where you're going to see the growth, but no new technology per se.

I'm curious about the appendage management business. We have a significant clinical trial coming up for the minimally invasive approach for WATCHMAN, the stand-alone approach. I'm wondering if you think this will benefit the entire market and enhance your appendage management business. If I recall correctly, during the early days of WATCHMAN data, there was a noticeable increase across the board for appendage management. I'd like to hear your thoughts on how this could affect your appendage management business.

Yes, I think the data from WATCHMAN has raised awareness about appendage management and its significance. The LAAOS III trial for Atrial Fibrillation patients showed very positive results in reducing strokes, and the AtriClip was also utilized in that trial. Moreover, guidelines have been updated, which reflects the growing acceptance of using AtriClip during open heart surgeries. I believe the significant advancement will come from LeAAPS, as it has the potential to expand the market similar to what we've seen with BoxX-NoAF. The preventive treatment of the appendage will make a substantial difference once the data is released, although that will take some time. We will need to be patient, but it is expected to significantly impact the market and our volumes.

Our next question comes from Matthew O'Brien with Piper Sandler.

Mike and Angie, this is Anna on for Matt. Just if I could ask a question on competition, specifically for AtriClip. There's been some concern around future entrants disrupting your position in the space. So if you could speak maybe to the moat around AtriClip and the differentiation of the device based on the competition you've seen in the past, that would be super helpful.

Sure. Competition is a natural part of the medical devices industry. We believe that competition is beneficial as it confirms that we are operating in a significant market, especially when major companies invest, even minimally, in products that may not be as strong. We anticipate these companies will enter the market and reinforce the notion that managing the appendage is crucial, thus raising awareness. We are confident that our products are the best available. We continue to innovate, with the FLEX-Mini and FLEX-V devices standing out as the top options in the market. Recently, clinical data was published on the V device, demonstrating a 100% closure rate using the V clip in 150 patients, and it has been peer-reviewed. This adds to more than 95 peer-reviewed studies and results involving 16,000 patients that indicate outstanding closure performance for our product, which is vital. There is substantial evidence supporting our offerings, combined with innovations like the FLEX-Mini, which is the smallest product available, offering better visibility and ease of use for physicians. Additionally, the LeAAPS trial is expanding the market, and it will be the only trial demonstrating prophylactic stroke reduction using only the AtriClip. Therefore, there are many developments in the coming years that will illustrate the AtriClip as the leading product in the market. I also welcome competition; it validates our space and highlights the significance of this market, which attracts interest from others.

Then I guess just on the hybrid business, there's obviously been some softness in that segment for a while now. When do you think you'll reach a bottom there and sort of see that growth inflect a bit?

Yes, there has been significant pressure from the PFA technologies, and we acknowledge this reality. When addressing the question about progression, we've observed that many patients undergo multiple ablations before transitioning to hybrid solutions. I believe we will witness some breakthroughs in this area. While I can't specify a definite turning point, we are seeing an increase in cases from sites that previously experienced a sharp decline in their activity. They are starting to manage cases again, although not yet at their previous levels. We are noticing that patients who have failed one or two catheter procedures using PFA and various other technologies are beginning to seek alternatives. We expect to see a rebound in growth for this market, given the large number of patients involved. Statistically, with approximately 600,000 catheter ablations annually, around 10%—or about 60,000 patients—are long-standing persistent patients. These individuals often experience poor outcomes with catheters, resulting in higher rates of re-intervention. Consequently, we foresee an eventual opportunity for us as these patients will likely seek effective technologies like ours that can assist them.

Our next question comes from Suraj Kalia with Oppenheimer. I'm showing no further questions at this time. I would now like to turn it back to Mike Carrel for closing remarks.

Sure. Again, everyone, thank you for joining us today on the call. We really do appreciate all of the support and are looking forward to closing the year incredibly strong and having an incredible 2026. Have a wonderful evening. Bye now.

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