ATRC 10-K & 10-Q changes, risk factors and insider trading

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this report. The following information should be carefully considered in addition to the other information set forth in this report, including the Management’s Discussion and Analysis of Financial ConditionsCondition and Results of Operations section and Consolidated Financial Statements and accompanying notes. If any of the risks or uncertainties described below actually occur or continue to occur, our business, reputation, financial condition, results of operations, future prospects and stock price could be materially and adversely affected. The risks below are not the only risks we face and additional risks not currently known to us or that we presently deem immaterial may emerge or become material at any time and may negatively impact our business, reputation, financial condition, results of operations, future prospects or stock price. The order in which these factors appear should not be construed to indicate their relative importance or priority.

•A prolonged downturn in macroeconomic conditions may materially and adversely affect our business.

•We may be subject to fines, injunctions and penalties if we fail to comply with extensive FDA regulations.

•If we or our third-party vendors fail to comply with extensive FDA regulations relating to the manufacturing of our products, we may be subject to fines, injunctions and penalties.

•We may be unable to comply with the covenants of our LoanCredit Agreement.

•The sale of material amounts of common stock could encourage short sales by third parties and depress the price of our common stockstock, causing our stockholders to lose partsome or all of their investment.

Our success depends in large part on the medical community’s acceptance of our products in the United States, which is the largest revenue market in the world for medical devices. We expect that sales of our ablation and LAAM products will continue to account for a majority of our revenue for the foreseeable future and that our future revenue will depend on the increasing acceptance by the medical community of our products as standard of care for treating Afib, managing the LAA and managing post-operative pain with Cryo Nerve Block therapy. The U.S. medical community’s acceptance of our products will depend upon our ability to demonstrate the safety and efficacy, advantages, short and long-term clinical performance and cost-effectiveness of our products. In addition, acceptance of products for the treatment of Afib is dependent upon, among other factors, the level of awareness and education of the medical community about the surgical treatment of Afib and the existence, effectiveness and safety of our products. Market acceptance and adoption of our products for the treatment of Afib also dependsdepend on the level of health insurer (including Medicare) reimbursement to physicians and hospitals for procedures using our products. Negative publicity resulting from incidents involving our products, or similar products could have a significant adverse effect on the overall acceptance of our products. If we encounter difficulties growing the market foradoption of our products in the United States, we may not be able to increase our revenue enough to achieve or sustain profitability, and our business and operating results willcould be seriously harmed.

The medical device industry, including the marketmarkets forin thewhich treatmentwe of Afib,operate, is highly competitive, is subject to rapid technological change and can be significantly affected by new product introductions and promotional activities. There is no assurance that our products will compete effectively against drugs, catheter-based ablation, implantable devices, other surgical ablation devices, other products or techniques to occlude the left atrial appendage or other products and techniques to manage post-operative pain. Our products may become obsolete prior to the end of their anticipated useful lives, or we may introduce new products or next-generation products prior to the end of the useful life of our current products, either of which may require us to dispose of existing inventory and related capital equipment and/or write off their value or accelerate their depreciation. In addition, other products may be sold at lower prices. Due to the size of our markets, we anticipate that new or existing competitors may developintroduce competing products, procedures and/or clinical solutions. There are few barriers to prevent new entrants or existing competitors from developingintroducing products to compete directly with ours. Companies also compete with us to attract qualified scientific, technical and commercial personnel as well as funding. Most of our competitors and potential competitors have greater financial, manufacturing, marketing and research and development capabilities than we have, and may obtain FDA approval or clearance for their products. The introduction of new products, procedures or clinical solutions, or our competitors obtaining FDA approvals or clearances, may result in price reductions, reduced margins, loss of market share, or may render our products obsolete, which could adversely affect our revenue and future profitability.

Our clinical trials are expensive to conduct, typically takingtake many years to complete and have uncertain outcomes. Delays in patient enrollment or failure of patients to consent or continue to participate in a clinical trial may cause an increase in costs and delays in the approval and attempted commercialization of our products or result in the failure of the clinical trial. Conducting successful clinical studies may require the enrollment of large numbers of clinical sites and patients, and suitable patients may be difficult to identify and recruit. Patient enrollment in clinical trials and completion of patient participation and follow-up dependsdepend on many factors, including the size of the patient population; the nature of the trial protocol; the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled subjects; the availability of appropriate clinical trial investigators, support staff, and proximity of patients to clinical sites; and the ability to comply with the eligibility and exclusion criteria for participation in the clinical trial and patient compliance.

A prolonged downturn in macroeconomic conditions in which we operate may materially and adversely affect our business.

A prolonged economic downturn as a result of the collateral effects of inflationary pressures, increases in interest rates, slower economic activity, a future outbreak of COVID-19 or a similaran infectious disease, among other factors, may adversely impact our business. Specifically, impacts to procedure volumes and hospital staffing may result in reductions of our revenue and materially and adversely affect our results of operations and cash flows. Geopolitical issues around the world have impacted the global supply chain and could materially and adversely affect global economic growth, disrupt discretionary spending habits and generally decrease demand for our products and services. Our customers’ ability to borrow money from their existing lenders or to obtain credit from other sources to purchase our products may be impaired, resulting in a decrease in sales. We may experience diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites. We may also encounter interruption or delays in the operations of FDA or other regulatory authorities, which may impact review and approval timelines. We are unable to predict the extent to which current or future worldwide economic conditions may impact our business.

FDA does not regulate the practice of medicine. Physicians may use our products in circumstances where they deem it medically appropriate, such as for the treatment of Afib, prevention of stroke, or reduction of post-operative Afib, even though FDA may not have approved or cleared our products to be marketed specifically for those indications. Some payors may deny coverage or payment for the use of our products for indications not specifically approved or cleared by FDA. Often, these denials can be overcome through an appeals process, but there is no guarantee of success in these cases.

We rely on single and limited source third-party vendors for the manufacture and sterilization of components used in our products as well as third-party vendors for the manufacturing of our RF generator and our EPi-Sense System. We have significant concentrations with a limited number of vendors. It would be a time consumingtime-consuming and lengthy process to secure these products from an alternative supplier.suppliers. Additionally, our devices are sterilized prior to use using ethylene oxide at third-party sterilizers. Recently, certain sterilization facilities have experienced voluntary or mandated temporary closures due to concerns over the impact of emissions of ethylene oxide from such facilities, and the Environmental Protection Agency has proposed regulations aimed at reducing hazardous air pollutants. We also rely on third parties to handle our warehousing and logistics functions for European and several other international markets on our behalf.

Future growth will also impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees. In addition, rapid and significant growth will place a strain on our administrative and operational infrastructure. In order to manage our operations and growth, we will need to continue to improve our operational and management controls, reporting and information technology systems and financial internal control procedures. For example, we may require further investments and enhancements to our enterprise resource planning software system that may impact our financial processes and operations. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our operating results and business could suffer.

We maintain insurance designed to provide coverage for ordinary risks associated with our operations and our ordinary indemnification obligations, which we believe to be customary for our industry. The coverage provided by such insurance may not be adequate for claims we may make or may be contested by our insurance carriers. If our insurance is not adequate or available to pay liabilities associated with our operations, or if we are unable to purchase adequate insurance at reasonable rates in the future, our business, financial condition, results of operations or cash flows may be materially and adversely impacted.

Our manufacturing facilities and the manufacturing facilities of any of our third-party component manufacturers, critical suppliers or third-party sterilization facilities are required to comply with FDA’s QSR,QMSR, which sets forth minimum standards for the procedures, execution and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of the products we sell. FDA may evaluate our compliance with the QSR,QMSR, among other ways, through periodic announced or unannounced inspections which could disrupt our operations and interrupt our manufacturing. If in conducting an inspection of our manufacturing facilities or the manufacturing facilities of any of our third-party component manufacturers, critical suppliers or third-party sterilization facilities, an FDA investigator observes conditions or practices believed to violate the QSR,QMSR, the investigator may document their observations on a Form FDA-483 that is issued at the conclusion of the inspection. A manufacturer that receives an FDA-483 may respond in writing and explain any corrective actions taken in response to the inspection observations. FDA will typically review the facility’s written response and may re-inspect to determine the facility’s compliance with the QSRQMSR and other applicable regulatory requirements. Failure to take adequate and timely corrective actions to remedy objectionable conditions listed on an FDA-483 could result in FDA taking administrative or enforcement actions. Among these may be FDA’s issuance of a Warning Letter to a manufacturer, which informs the manufacturer that FDA considers the observed violations to be of “regulatory significance” that, if not corrected, could result in further enforcement action. FDA enforcement actions, which include seizure, injunction and criminal prosecution, could result in total or partial suspension of a facility’s production and/or distribution, product recalls, fines, suspension of FDA’s review of product applications and FDA’s issuance of adverse publicity. Thus, an adverse inspection could force a shutdown of our manufacturing operations or a recall of our products. Adverse inspections could also delay FDA approval of our products and could have an adverse effect on our production, sales and financial condition.

In the event of a patent dispute, if a third-party’sthird party’s patents were upheld as valid and enforceable, and we were found to be infringing, or found to be inducing infringement by others, we could be prevented from selling our products unless we were able to obtain a license to use technology or ideas covered by such patent or are able to redesign our system to avoid infringement, or we may be ordered to pay substantial damages to the patent holders. A license may not be available at all or on terms acceptable to us, and we may not be able to redesign our products to avoid any infringement. Modification of our products or development of new products could require us to conduct additional clinical trials and to revise our filings with FDA and other regulatory bodies, which would be time-consuming and expensive. If we are not successful in obtaining a license or redesigning our products, we may be unable to sell our products and our business could suffer.

Our net losses have resulted principally from costs and expenses relating to sales, training and promotional efforts, research and development, clinical trials, seeking regulatory clearances and approvals and general operating expenses. We expect to continue to incur substantial expenditures and to potentially incur additional operating losses in the future as we further develop and commercialize our products. If sales of our products do not continue to grow as we anticipate, we may not be able to achieve profitability. Our expansion efforts may prove to be more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses. Our losses have had, and are expected to continue tomay have, an adverse impact on our working capital, total assets and accumulated deficit.

As of December 31, 2024,2025, we had $234,781 in goodwill, which represents the purchase price we paid in excess of the fair value of the net assets we acquired. The Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 350, “Goodwill and Other Intangible Assets” requires that goodwill be tested for impairment at least annually (absent any impairment indicators). We may have future impairment adjustments to our recorded goodwill. Any finding that the value of our goodwill has been impaired would require us to record an impairment charge which could materially reduce the value of our assets and reduce our net income or increase our net loss for the year in which the impairment charge occurs and increase our accumulated deficit.

To mitigate the risk of supply interruptions, we may choose to maintain additional inventory of our products or component parts. Managing our inventory levels is important to our cash position and results of operations and is challenging in the current economic environment. As we grow and expand our product offerings, managing our inventory levels becomes more difficult, particularly as we expand into new product areas and bring product enhancements to market. While we rely on our personnel and information technology systems for inventory management, our personnel and information technology systems may fail to adequately perform these functions or may experience an interruption. An excessive amount of inventory reduces our cash available for operations and may result in excess or obsolete materials. Conversely, inadequate inventory levels may make it difficult for us to meet customer product demand, resulting in decreased revenue. An inability to forecast future revenue or estimatedestimate life cycles of products may result in inventory-related charges that would negatively affect our gross margins and results of operations and increase our accumulated deficit.

The majority of our accounts receivable arise from sales in the United States. However, we also have significant receivable balances from customers within the European Union and Asia. Our accounts receivable in the United States are primarily due from public and private hospitals. Our accounts receivable outside the United States are primarily due from public and private hospitals and from independent distributors. Although our historical write-offs of accounts receivable have not been significant, we monitor the financial performance and credit worthinesscreditworthiness of our customers so that we can properly assess and respond to changes in their credit profile. Our independent distributors operate in certain countries where economic conditions continue to present challenges to their businesses, and, thus, could place the amounts due to us at risk. These distributors are owed amounts from public hospitals that are funded by their governments. Adverse financial conditions in these countries may negatively affect the length of time that it will take us to collect associated accounts receivable or impact the likelihood of ultimate collection.

TheOur Credit Agreement entered into on January 5, 2024, contains specific financial covenants and a minimum liquidity requirement,covenants, along with other terms restricting indebtedness, liens, investments and acquisitions, asset dispositions, certain payments and other customary representations and warranties. The Credit Agreement contains mandatory prepayment provisions which require prepayment of amounts outstanding (i) upon the receipt of proceeds from the issuance of any non-permitted indebtedness and (ii) when there is an Availability shortfall, as defined.defined in the Credit Agreement. The occurrence of an event of default could result in an obligation to repay all obligations in full and a right by our lenders to exercise all remedies available to them. If we are unable to pay those amounts, our lenders could proceed against the collateral granted to it pursuant to the Credit Agreement, and we may in turn lose access to both our collateral and our current source of borrowing availability.

We provide financial guidance about our business and future operating results. In developing this guidance, our management makes certain assumptions and judgments about our future operating performance, including rate of adoption of our products, projected hiring to support our growth, continued increase of our market share, potential impact from competitive devices and therapies, and stability of the macro-economicmacroeconomic environment in our key markets. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. Our business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control and could adversely affect our operations and operating results. Furthermore, if we make downward revisions of our previously announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors, or other interested parties, the market price of our common stock could decline.

We may need to raise capital in the future to fund our operations or new initiatives or reduce or pay in full our indebtedness.borrowings and financing obligations. If we raise funds by issuing equity securities, our stock price may decline and our existing stockholders may experience significant dilution. Furthermore, we may enter into capital raising transactions or issue shares in acquisitions at prices that represent a substantial discount to market price. A negative reaction by investors and securities analysts to any sale of our equity securities could result in a decline in the trading price of our common stock.

We are a leading innovator in treatments for atrial fibrillation, left atrial appendage management and post-operative pain management. Our ablation and left atrial appendage management products are used by physicians during both open-heart and minimally invasive surgical procedures. In open-heart procedures, the physician is performingperforms heart surgery for other conditions, and our products are used in conjunction with (or “concomitant” to) such a procedure. Minimally invasive procedures are performed on a standalone basis, and often include multi-disciplinary or “hybrid” approaches, combining surgical procedures using AtriCure ablation and LAAM products with catheter ablation procedures performed by electrophysiologists. Our pain management devices are used by physicians to freezeablate nervesperipheral duringnerves, cardiothoracicproviding orpain relief in cardiac, thoracic surgicaland amputation procedures. We anticipate that substantially all of our revenue for the foreseeable future will relate to products we currently sell or are in the process of developing.

In 2024,2025, we realized significant global revenue growth andresulting continuedfrom our strategic initiatives of product innovation, clinical science and physician education and training to expand awareness and adoption. Our worldwide revenues for the year ended December 31, 20242025 of $465,307$534,528 wasincreased anby increase of 16.5%14.9% over the prior yearyear, driven by growingexpanding adoption acrossof keyour pain management, open ablation and appendage management product lineslines. asOur well as newrecent product launches.launches, Historicallyincluding thereour havecryoSPHERE beenMAX probe, AtriClip FLEX-Mini device and EnCompass clamp meaningfully contributed to our growth in 2025. There are limited competitors in our key markets,markets; buthowever, new entrants are marketingdeveloping and developingmarketing competing products, procedures, and/or clinical solutions that may cause variability in our results.

CLINICAL SCIENCE. We invest in studies to expand labeling claims, support various indications for our products and publish clinical data for therapies and procedures involving our products. During 2024,2025, we supported the publication of 1913 articles and 1715 congress abstracts featuring clinical studies with our product.products.

LeAAPS. 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. This prospective, multicenter, randomized trial evaluates safety at 30 days post-procedure to demonstrate no increased risk with LAA exclusion during cardiac surgery, and efficacy over a minimum follow-up of five years post procedure. TheIn July 2025, we completed trial provides for enrollment of up to 6,500 subjects at up to 250 sites worldwide. In January 2023, the first patient was enrolled in the trial, and we ended 2024 with over 4,2006,573 patients enrolled.across Site139 initiationcenters andglobally. enrollmentPatient isfollow-up remains ongoing.

BoxX-NoAF. The EnCompass clamp and the AtriClip in Box Lesion and Left Atrial Appendage EXclusion Procedure for the Prevention of New Onset of Atrial Fibrillation (BoxX-NoAF) IDE trial will evaluateevaluates the impact of concomitant ablation using the EnCompass clamp and LAA exclusion with the AtriClip system in non-AF patients for the reduction of post-operative AF (POAF) and Clinical AF. This prospective, multi-center, multi-national randomized trial evaluates safety at 30 days post-procedure for POAF and secondary effectiveness for Clinical AF through three years. The trial provides for enrollment of up to 960 subjects.subjects Duringat up to 75 sites globally. FDA approved the trial protocol during the fourth quarter of 2024,2024 FDAand approvedduring October 2025, we completed the trialfirst protocol.patient Weenrollment. expect siteSite initiation toand beginenrollment byis the end of 2025.ongoing.

TRAINING. Our professional education andteam marketing teams conductconducts a variety of virtualin-person and in-personvirtual training programs for physicians and other healthcare professionals. These training methods ensure access to continuing education and awareness of our products and related procedures. During 2023,2025, we launched new and innovative training methods for physicians that include virtual proctoring and observerships as well as the ability to review case-in-a-box on a peer-to-peer basis. We have also extended our courses for Advanced Practice Providers, painincorporating managementnew content and workshops. We also recently launched our first electronic manual created by physicians for physicians that provides an outline for best practices in pectusdeveloping procedures,and as well asgrowing a bestHybrid practiceAblation courseProgram. forThese developingnew arrhythmiatraining programs,events along with aour primarytraditional focuson-demand, onlocal Hybridand therapies.national Thesetraining trainingscourses allow for collaborative, hands-on engagement with our physician partners and other healthcare professionals. Additionally, our professional education courses continue to be enhanced by the use of simulation models or synthetic cadavers, known as CADets. These reusable CADets provide a sustainable alternative to the use of cadaver specimens, in addition to increasing the efficiencies of education and more cost effective training alternatives. In 2024, we continue to innovate physician training to improve accessibility and efficiency for our physician partners. We are currently piloting the use of live streaming to enable remote proctoring and case observation.

Worldwide revenue increased 16.5%14.9% as reported and(14.4% on a constant currency basis.basis). We experienced significant growth in allour keyopen ablation, appendage management and pain management product lines as a result of deepening market penetration, continuing physician adoption and several new product launches. InternationalMinimally revenueinvasive increasedablation 25.6%sales declined from continued reduction in Hybrid procedures as reportedphysicians andadopt onPFA acatheters constantto currencytreat basis,patients. across all franchises and major geographic regions, while keyKey products contributing to the increase in revenue in the United States were: EnCompass clamp in open ablation, cryoSPHERE MAX probe for post-operative pain management and AtriClip FLEX-Mini device for appendage management in open chest procedures. International revenue increased 20.2% as reported (17.5% on a constant currency basis), across all franchises and major geographic regions.

Cost of revenue and gross margin. Cost of revenue increased $18,908$15,966 primarily reflecting higher sales volumes. Gross margin decreasedincreased by 5529 basis points driven by lessmore favorable geographic and product mix, offsetting increasing product costs as well as anless increasefavorable ingeographic product costs.mix.

Selling, general and administrative expenses. Selling, general and administrative expenses increased $38,221,$19,658, or 15.1%.6.7%. Personnel costs, including travel and share-based compensation, increased $27,384$18,331 as a result of headcount growth in headcount and higher variable and share-based compensation. Operational growth droveresulted $2,156in an additional professional$1,629 services,in IT and corporate costs along with $2,079 additional marketing and meeting activities. Finally, the increase reflects a $4,412 non-recurring net gain in 2023 related to legal settlements. See Note 11 – Commitments and Contingencies for related discussion.expenses.

As of December 31, 2024,2025, we had cash and cash equivalents of $122,721$167,428 and unused borrowing capacity of approximately $61,885 under our existingasset-backed credit agreement.agreement with JPMorgan Chase Bank, N.A. In connection with the amended credit agreement entered into on January 9, 2026, the Company paid down $865 of borrowings and had $62,750 available borrowing capacity under the amended asset-based revolving credit facility (ABL Facility). All cash equivalents and most of our operating cash are held in United States financial institutions. A minor portion of our cash is held in foreign banks to support our international operations. We had net working capital of $194,402$240,997 and an accumulated deficit of $401,755$413,203 as of December 31, 2024.2025.

Credit facility. OnAs Januaryof 5,December 2024,31, 2025, we entered intohad an asset-based credit agreement with JPMorgan Chase Bank, N.A. as Administrative Agent, JPMorgan Chase Bank, N.A. and Silicon Valley Bank, a division of First-Citizen Bank and Trust Company, as Joint Lead Arrangers and Joint Bookrunners (Credit Agreement) that provides for a $125,000 asset-based revolving credit facility (ABL Facility),Facility, with an option to increase the revolving commitment by an additional $40,000. A portion of the ABL facility, limited to $5,000, is available for the issuance of letters of credit. The Credit Agreement has a three-year term and expires January 5, 2027. 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: (i) an alternate base rate (ABR) plus an applicable margin or (ii) an adjusted term secured overnight financing rate (SOFR) plus an applicable margin. The proceeds of the ABL Facility were used to terminate the Company’s indebtedness under the prior loan agreement with Silicon Valley Bank. As of December 31, 2024,2025, our outstanding debt was $61,865 and we had unused borrowing availability of approximately $61,885.

For additional information on the terms and conditions, as well as applicable interest and fee payments, see Note 98 – Indebtedness.Borrowings and Financing Obligation.

Other Contractual Obligations. Our future obligations include both current and long-term obligations. 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, yet the agreement may be terminated early for any reason. Furthermore, we incur additional variable costs, including pass through costs from clinical trial sites. We expect to disburse between $14,000$10,000 and $17,000$12,000 of fixed and variable costs based on estimated achievement of milestone payments, site initiation and trial enrollmentpayments within the next twelve months.

We have operating and finance leases primarily for our offices, manufacturing and warehouse facilities and automobiles. Our finance leases consist primarily of principal and interest payments related to our Mason, Ohio headquarters building. As of December 31, 2024,2025, current finance lease obligations are $1,186$1,306 and long-term obligations are $7,281.$5,975. Our operating leases for office and warehouse space includesinclude current obligations of $1,619$1,734 and long-term obligations of $4,579$5,541 as of December 31, 2024.2025. For additional information, see Note 109 – Leases.

We have a contractual obligation for a contingent consideration payment under the SentreHEART merger agreement that would be paid in cash and AtriCure common stock and cash,stock, up to a specified maximum number of shares. As of December 31, 2024,2025, we believe the likelihood of payment is remote, and the estimated fair value of the contingent consideration is $0. See Note 2 – Fair Value.

Cash flows provided by operating activities. Net cash provided by operating activities increased $7,720$45,130 in 20242025 as compared to 2023.2024, Whileprimarily reflecting the improvement in operating results declinedof $14,260,$33,250. thisThis declineimprovement wasincludes driven$6,000 primarily by an increasereduction in adjustmentsthe acquired IPR&D milestone payments in 2025 in comparison to income2024, and changes in non-cash expenses as well as the acquisition of in-process research and development for $12,000. Changes in non-cash expenses include $4,677 increase in share-based compensation, $3,920 increase in depreciation & amortization and $1,362 loss on extinguishment of debt. Cashcash used infor working capital remainedand flatother yearassets overand yearliabilities decreased $14,072 due to moderating investments in inventoryinventory. Offsetting these improvements, our non-cash expenses, including depreciation, amortization and share-based compensation increased $3,808 in 2024, offset by higher annual variable compensation due to improved operating performance.2025.

Cash flows providedused byin investing activities. Net cash providedused byin investing activities increased by $8,417$44,784 in 20242025 compared to 2023.2024. This increase in cash used is attributable to a $18,000$53,668 decrease in cashsales paid for acquisitions year over year, offset by a $10,147 decrease inand maturities of available-for-sale securities.securities, while acquired IPR&D milestone payments declined $6,000 in 2025.

Cash flows usedprovided inby financing activities. Net cash usedprovided inby financing activities increased by $3,571$4,779 in 20242025 compared to 2023,2024, driven by $1,686$6,250 paymentin forproceeds extinguishmentfrom ofthe debtAugust and2025 financingsale-and-leaseback fees, net of borrowings,arrangement and a $1,491$1,204 decreaseincrease in proceeds from stock option exercises and the employee stock purchase plan. These inflows were offset by a $4,212 increase in shares repurchased for payment of taxes on stock awards.

Share-Based Employee Compensation—We estimate the fair value of performance share awards with a performance condition initially based on the closing stock price on the date of grant assuming the performance goal will be achieved. Such performance share awards have specified performance targets over a three-year performance period based on the compound annual growth rate (CAGR) of our revenue and percentage increase in Adjusted EBITDA over athe three-yearbase performanceyear. period.Adjusted EBITDA is calculated as net income/loss before other income/expense (including interest), income tax expense, depreciation and amortization expense, share-based compensation expense and non-recurring charges that are not reflective of the operational results of the Company's core business and may affect comparability of results period-over-period. Adjusted EBITDA specifically excludes PFA co-development upfront and milestone payments. With respect to these performance share awards, the number of shares that vest and are issued to the recipient is based upon revenue and Adjusted EBITDA performance over the performance period. We may adjust the expense over the performance period based on changes to estimates of performance target achievement. If such goals are not met or service is not rendered for the requisite service period, no compensation cost is recognized, and any recognized compensation cost from prior periods will be reversed.

We are a leading innovator in surgical treatments and therapies for atrial fibrillation, left atrial appendage management and post-operative pain management. Our cardiac ablation and left atrial appendage management (LAAM) products are used by physicians during both open-heart and minimally invasive surgical procedures. In open-heart procedures, the patient is undergoing heart surgery for other conditions, such as a mitral or aortic valve repair or a coronary artery bypass, and our products are used by physicians in conjunction with (or “concomitant” to) such a procedure. Minimally invasive procedures are performed on a standalone basis,basis and often include multi-disciplinary or “hybrid” approaches, combining surgical procedures using our ablation and LAAM products with catheter ablation performed by an electrophysiologist. Our pain management solutions are used by physicians to freeze nerves during cardiac, thoracic or amputation surgical procedures. We anticipate that substantially all of our revenue for the foreseeable future will relate to products we currently sell or are in the process of developing.

During the first quarter ofIn 2026, we realizedhave strongmaintained 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 threesix months ended MarchJune 31,30, 2026 was $141,249,$294,853, representing an increase of $17,629,$35,094, or 14.3%13.5% (12.8%12.6% on a constant currency basis), over the first threesix months of 2025, highlighted by accelerated adoption in our pain management, appendage management, and open ablation product lines, where recent product innovation contributedcontinued to contribute to growth. ThereWe arehave limited competitorscompetition intoday; however, our key markets; however,are attracting competition from new entrants are developing competing products, procedures, and/or clinical solutionssolutions. thatIncreasing competition may causelead variabilityto loss of market share in critical franchises, pricing and margin pressure, and increased costs, which could adversely affect our results.revenue and profitability.

PRODUCT INNOVATION. We continue to seedeliver 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 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:

BoxX-NoAF. The Box Lesion and Left Atrial Appendage EXclusion Procedure for the Prevention of New Onset of Atrial Fibrillation (BoxX-NoAF) IDE trial evaluates the impact of concomitant ablation using the EnCompass® clamp and LAA exclusion with the AtriClip system in non-AF patients for the reduction of post-operative AF (POAF) and Clinical AF. This prospective, multi-center, multi-national randomized trial evaluates safety at 30 days post-procedure for POAF and secondary effectiveness for Clinical AF through three years. The trial provides enrollment of up to 960 subjects across 75 sites. Site initiation and enrollment is ongoing.

Three months ended MarchJune 31,30, 2026 compared to three months ended MarchJune 31,30, 2025

Worldwide revenue increased 14.3%12.8% (12.8%12.4% on a constant currency basis). In the United States, we sawrealized a 14.9%13.6% 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 andmanagement, EnCompass® clamp for open ablation.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 11.5%9.6% (3.3%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.

Cost of revenue and gross margin. Cost of revenue increased $946$318 reflecting higher sales volumes. Gross margin increased 246269 basis points, driven primarily by favorable product and geographic mix.mix, along with manufacturing efficiencies.

Research and development expenses. Research and development expenses increaseddecreased $1,707$2,882 or 7.6%,9.8%, primarily driven by anthe $818$5,000 increasedecrease 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 asrelated ato resultclinical of timing of product developmentinitiatives, and clinical$498 initiatives and $738 increase inhigher personnel costs, including travel and share-based compensation.

Selling, general and administrative expenses. Selling, general and administrative expenses increased $8,496,$4,172, or 11.2%,5.3%, driven by a$2,228 $6,499 increase inhigher 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 marketingMarketing and training costs increasingincreased $679$1,357 driven by expanded tradeshow and training activities.activities, while IT expenses increased $579.

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

As of MarchJune 31,30, 2026, we had cash and cash equivalents of $146,165$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). All cash equivalents and most of our operating cash is held in United States financial institutions. A small portion of our cash is held in foreign banks to support our international operations. We had net working capital of $240,502$263,615 and an accumulated deficit of $413,095$404,140 as of MarchJune 31,30, 2026.

Consolidated Cash Flows - For the threesix months ended MarchJune 31,30, 2026 and 2025

Cash flows usedprovided inby operating activities. Net cash usedprovided inby operating activities decreasedincreased $7,030$7,605 from 2025 to 2026, reflecting improved operating results of $6,855,$22,000, driven by higher sales andsales, improved operating margin.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 $1,855$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 increasedimproved by $2,171$1,725 from 2025 to 2026, due to the decrease of $5,000 for the 2025 acquired IPR&D milestone payment, offset by a $1,671$2,775 increase in purchases of property and equipment and $500 in capital grant proceeds received in 2025.

Credit facility. The Company's Credit Agreement with JPMorgan Chase Bank, N.A. and Silicon Valley Bank was amended as of January 9, 2026. The Credit Agreement provides for a $125,000 asset-based revolving credit facility, with an option to increase the revolving commitment by an additional $40,000. A portion of the ABL Facility, limited to $5,000, is available for the issuance of letters of credit. The Credit Agreement has a three-year term and expires January 9, 2029. 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: (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 MarchJune 31,30, 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 MarchJune 31,30, 2026.