AtriCure Inc (ATRC) 2014 Q4 法說會逐字稿

Good afternoon and welcome to AtriCure's fourth-quarter and full-year 2014 earnings conference call.

My name is Denise and I will be your coordinator for the call today.

(Operator Instructions)

As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Lynn Pieper from Westwicke Partners for a few introductory comments.

Please proceed.

Thank you, Denise.

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 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.

AtriCure's results may differ materially from those projected on today's call.

AtriCure undertakes no obligation to publicly update any forward-looking statement.

Additionally, we may refer to non-GAAP financial metrics.

A reconciliation of these non-GAAP 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.

Mike?

Thank you, Lynn.

Good afternoon and thank you for joining us today.

2014 was another solid year for AtriCure with accelerating growth throughout the year.

We continue to build a strong foundation for the future and are encouraged by our prospects of becoming the leading innovator in the treatment of Afib and LAA management for stroke reduction.

We have several large opportunities in front of us in both open and minimally invasive Afib treatment and LAA management.

We estimate these are billion dollar markets long-term.

To that point, we are holding an Analyst Day in New York on March 24, where clinicians that have built practices treating Afib will lead discussions focused on examining the available markets for innovative solutions and discuss the impact of our clinical trials.

I'll start today's call with a quick overview of our results for the quarter, followed by an update on the business, our clinical trial progress, and education initiatives.

Then I will turn the call over to Andy Wade, our CFO, who will provide detail on our financial results and provide an outlook for 2015.

After that, I will come back to make some concluding remarks.

Our fourth-quarter revenue reached $29.4 million, up 34% from the fourth quarter last year.

Growth was balanced across all of our product lines, both in the US and internationally.

In the US, sales were up 35%, and international sales were up 33%.

Of particular note, the AtriClip franchise was again strong, with an increase in the US of 64% over the fourth quarter of 2013.

AtriClip PRO sales increased 101%, while sales of open clips were up 54%.

We have now sold more than 43,000 AtriClip LAA occlusion devices, including 17,000 in 2014 alone.

In fact, more AtriClip devices have been sold than all other LAA management devices combined.

Physicians are increasingly becoming aware of the importance of managing the left atrial appendage to reduce the incidence of Afib and prevent stroke, and we see a large opportunity ahead of us.

In the fourth quarter, we brought two product extensions to market, both of which offer functionality to broaden our reach to clinicians.

The AtriClip FLEX, as it sounds, has greater shaft flexibility to enable easier placement on the appendage in open-heart surgery.

The CRYO3 is a more flexible cryoprobe to appeal to the subset of surgeons who prefer a more malleable shaft.

Both the AtriClip FLEX and CRYO3 are demonstrations of our commitment to incorporate surgeon feedback and preferences to continuously improve our products.

Now for an update on our clinical programs.

Our Staged Dual Epicardial Endocardial procedure for treatment of Afib, or DEEP AF trial, is a landmark multi-center pivotal trial designed to prove the benefits of standalone ablation for the treatment of patients with persistent terms of Afib.

This hybrid procedure combines the benefits of both surgical and catheter ablation, along with endovascular mapping techniques, leveraging the expertise and skills of both the cardiac surgeon and the electrophysiologist.

In bringing EPs and cardiac surgeons together as a team, our goal is to establish a new standard for patients presenting with persistent or long-standing persistent Afib.

We are excited to announce that last week, we treated our first two patients at PinnacleHealth in Harrisburg, Pennsylvania.

This is the first of 25 sites that we have identified, many of which are in the process of securing IRB approval.

Ultimately, we plan to enroll 220 patients in the study.

Moving on to our stroke trial.

In December, we reviewed the safety and efficacy results of our Clip data on over 50 patients with the FDA.

This includes two subsets of patient data.

First, we have three-month follow-up data on approximately one-half of the 11 patients that we have enrolled in our feasibility trial.

The data show 100% exclusion and no safety adverse events.

Second, there were 44 patients treated during IDE feasibility studies for the Hybrid and Staged DEEP, who also had LAA clips placed.

These data showed 100% intra-operative exclusion and no safety adverse events related to the clip.

Because the clips used in these two IDE feasibility studies are identical in design, materials, specifications, and manufacturing processes to that in the IDE exclude study, we also discussed the primary efficacy rate for LAA occlusion at three months, which was 98.4%, or 60 of 61 patients in exclude.

In aggregate, the results are both consistent and impressive.

As a result of this discussion and review, the FDA gave us permission to move forward with the pivotal trial.

However, the agency is strongly recommending a randomized controlled trial.

We have since held several scientific advisory board meetings with leading cardiologists, electrophysiologists, stroke neurologists, and surgeons to gather their input on the trials design enrollment.

Through these and additional ongoing industry discussions, we are finalizing our plans for the optimal pivotal trial design, taking into consideration that the primary objective is to prove that our AtriClip is safe and effective at preventing stroke.

We plan to finalize our pivotal trial design by mid-2015.

In the meantime, one thing is for sure: our discussions with the clinician community are incredibly productive and there is a tremendous amount of interest in a trial like this.

We look forward to providing more detail on our trial design on our 2Q conference call.

As for our training and education initiatives, we continue to realize tremendous benefit from our efforts.

Since initiating our Maze IV training programs in early 2012, we have trained more than 2,000 surgeons worldwide to treat persistent and long-standing persistent Afib concomitant to other open cardiac procedures.

As a result of this and other industry initiatives, in the US, we have seen an increase from 15,000 concominant Afib surgeries in 2011 to an estimated 26,000 in 2014, almost double.

It has been gratifying to see our commitment to clinical science and education help benefit tens of thousands of Afib patients and their families.

In 2014, we conducted 14 advanced ablation training courses in the US and another 14 international Maze IV training courses.

The impact: a more than 40% increase in patients treated at these hospitals.

We also began to take advantage of many of the other training opportunities at major society meetings for surgeons and electrophysiologists around the world.

As we enter 2015, we are accelerating our educational efforts to continue building awareness of Afib and expanding access to treatment by educating healthcare providers on the safe and effective use of AtriCure ablation and LAA management products.

Some of our plans include the following.

Number one, initiating the James L. Cox Fellowship in atrial fibrillation.

The proposal has been submitted to the American Association of Thoracic Surgeons, or AATS, and we expect the first class in the third quarter of this year.

Number two, transitioning our focus worldwide from Maze IV to advanced ablation courses.

And number three, establishing advanced training sites where physicians can observe and learn from the world's leading Afib surgeons.

In summary, we finished 2014 with momentum across the board.

As we enter 2015, our foundation is strong and the excitement in our business is at an all-time high.

With the success of our clinical, technical, and commercial teams, we continue to see great growth prospects.

I will now turn it over to Andy Wade for a more deep financial discussion.

Thank you, Mike.

For the fourth quarter of 2014, revenue increased 34.4% on a GAAP basis to $29.4 million.

On a constant currency basis, worldwide revenue increased 36.5%.

Revenue from product sales in the US was $22.1 million, an increase of 34.9% from the fourth quarter of 2013.

Revenue from open chest ablation-related product sales in the US increased by approximately $2.2 million to $12.2 million, representing growth of 22.5%, driven by our education and training efforts as we build the still underpenetrated market for concomitant surgical ablation.

US sales of products used in minimally invasive procedures increased approximately $750,000 to $4.3 million, up 21.5%, and driven primarily by the contribution from Estech products with organic MIS growth flat as expected.

We expect this trend to continue through 2015.

Continued development of clinical data in support of MIS ablation for the treatment of Afib through trial such as AtriCure's DEEP IDE study beginning this quarter, are critical to growing this market.

US sales of the AtriClip system during the fourth quarter of 2014 were $4.8 million, as compared to $2.9 million for the fourth quarter of 2013, an increase of 64.1%.

International revenue grew 33.1% on a GAAP basis and 41.3% on a constant currency basis, as compared to the fourth quarter of 2013, to $7.3 million.

Valve total sales totaled $1 million worldwide, approximately $800,000 in the US, and $200,000 in the international markets.

Gross margin for the fourth quarter of 2014 was 69.4% as compared with 71.6% for the fourth quarter of 2013.

As in previous quarters, the sales of products acquired in the Estech transaction put some pressure on the overall gross margin.

Additionally, the placement and servicing of the capital equipment needed to run our ablation disposables, including the Estech equipment, continues to be strong, but does put some pressure on gross margin as we build the business to support these placements.

Operating expenses increased 22.9%, or approximately $4.7 million, from $20.5 million for the fourth quarter of 2013 to $25.2 million for the fourth quarter of 2014.

Research and development expenses, which include clinical and regulatory activities, were $5 million for the fourth quarter of 2014, or 17% of sales, an increase of $1.3 million over the fourth quarter of 2013.

The increase was driven by both clinical trial and product development efforts.

SG&A increased approximately $3.3 million from the fourth quarter of 2013 to a total of $20.2 million, or 69% of sales.

The increase was due primarily to increases in selling, marketing, and training costs.

Our operating loss for the quarter was $4.8 million, consistent with the operating loss for the fourth quarter of 2013.

Our adjusted EBITDA loss was approximately $1.6 million, compared to a $3.3 million adjusted EBITDA loss for the fourth quarter of 2013.

Note that our EBITDA loss in the fourth quarter includes approximately $300,000 of costs related to transitioning the Estech business into AtriCure.

At this point, we do not anticipate further non-recurring expenses related to the Estech deal.

Our net loss per share was $0.20 for the fourth quarter of 2014 compared to $0.24 for the fourth quarter of 2013.

Turning to the full-year, worldwide revenue was $107.5 million, a GAAP increase of 31.2%, or $25.6 million over 2013.

On a constant currency basis, growth was 31.4%.

For the US, sales grew 28.7% to $80.2 million.

US open revenue was strong, growing at 18% to $44.7 million.

US sales of products used in minimally invasive procedures increased 17.6% from 2013 to $16.1 million, which was primarily driven by sales of products acquired in the Estech transaction.

US sales of AtriClip products grew 54.1% to $16.7 million, driven by strong performance in both the open and MIS products.

International revenue grew 39.2% on a GAAP basis and 39.8% on a constant currency basis, to $27.3 million.

Gross margin was 70.5% for 2014 compared to 72.7% for 2013.

Earnings per share was a loss of $0.61 for 2014 compared to $0.56 for 2013, and our adjusted EBITDA loss was $12 million for 2014 compared to $5.8 million for 2013.

Our SG&A expense for 2014, and therefore operating income, net loss, and EPS, includes an $8 million offset to expense due to an adjustment to the earnout liability recorded in conjunction with the Estech transaction.

As we stated on the last call, the earnout liability has been reduced to zero.

For modeling purposes, excluding the earnout, our SG&A expenses would have been approximately $81.5 million in 2014, and reflect our continued investments to support our growth strategy and integrate Estech into our business.

The $12 million EBITDA loss mentioned previously and in the press release table already removes the impact of this earnout adjustment.

We also wanted to report that the final estimated impact of Estech-related non-recurring expenses for the year was $4.1 million, most of which was contained within SG&A expenses.

Without these expenses, the adjusted EBITDA loss would have been $7.9 million for 2014.

We ended the quarter with $68.5 million in cash, cash equivalents, and investments.

Lastly, we are reiterating our guidance for 2015.

We anticipate top-line growth of approximately 14% to 16% year-over-year, or a range of $122.5 million to $124.5 million on a GAAP basis.

On a constant currency basis, we estimate growth at between 16% and 18%.

We anticipate gross margin to be approximately 70% to 71% for the year, based on current trends and investments to support growth.

The top end represents a slight increase from the 2014 reported gross margin.

Items with a positive effect on gross margin include volume leverage, no additional nonrecurring costs from the Estech acquisition, and programs to increase efficiency.

Headwinds on gross margin include a stronger international sales mix, continued heavy capital placement, and the strengthening of the US dollar.

We are still targeting long-term gross margins of 75% and believe this is achievable within the next five years due to increased volumes and efficiency.

We expect R&D to be 19% to 21% of sales, driven by spending in clinical trials and product development.

We expect SG&A to be roughly 69% to 70% of sales in 2015, driven by continued increases in spending, relating to selling, training, and education, and international expansion.

Adjusting for the one-time Estech transaction-related items in 2014, this represents a slight leveraging of our SG&A expenses.

We expect adjusted EBITDA for 2015 to be a loss of approximately $7 million to $9 million.

The improvement from 2014 is driven primarily by the completion of the Estech acquisition in 2014, as all nonrecurring costs were complete by the end of the year.

We continue to feel that the investments in clinical science and product development are driving the bulk of the EBITDA loss, but are warranted, given the exciting long-term growth plan of the Company.

At this point, I would like to turn the call back to Mike for closing comments.

Thank you, Andy.

In 2014, we strengthened our foundation for our future and we plan to continue to solidify this -- the future of our market-building strategy with thoughtful investment in our growth initiatives.

Our core growth strategy is unchanged and is, in fact, accelerating.

We are working very hard to expand the market and capture share by increasing awareness through education and training, driving innovation through clinical and commercial support.

We look forward to updating you on our progress and hope to see all of you at Analyst Day in New York on March 24.

With that, I will open up to questions.

(Operator Instructions)

Jason Mills, Canaccord.

Hi, Mike and Andy, can you hear me okay?

Yes, we can hear you great.

Hello.

Fantastic.

Congrats on a good quarter -- another good quarter, I should say.

I have, Mike, one clinical 20,000-foot question, and then, Andy, one question on the P&L.

With respect to the former, Mike, I'm sure you will go over this probably in much more depth at the analyst meeting, but perhaps it would be helpful to talk a little bit more about the DEEP AF study.

Remind us of the study protocol and [mainly] the cadence of the [EP] and endocardial steps and any best practices that you've been passing around to date?

Understanding that you're only a few patients in, but have had several meetings with your investigators over the last couple of months.

And then, last part of that question is just helping us frame the market opportunity, juxtaposed to the current market in concomitant, which is obviously separate.

One thing that get missed quite a lot is just the market opportunity that exists here outside of your current concomitant market.

And then, Andy, I have a follow-up for you after that, thanks.

Okay.

Thank you, Jason.

As to the DEEP Protocol, the way the protocol works is there is a -- it's the lead PIs at each site are both an EP and a surgeon.

Then the way that it actually transpires is usually the EP is the referring physician of the patients, they meet with those patients, talk to them about the procedure, and then from there, you get surgery first, followed on 90 days later by a catheter ablation.

You are doing most of the left-sided lesions -- for those of you that know the Maze -- most of the left-sided lesions are being done by the surgeon, and you're also clipping the appendage with the AtriClip PRO during that procedure, as well, to take out that line as you are going down that path.

Then you are doing some of the right-sided lesions, and then the EP is coming in 90 days later and doing a combination of both touch-up and also doing the flutter line.

From there, you've got a complete Maze.

So with the combination of the two, you get the complete Maze procedure, but it takes both steps to get there.

Then there's a 90-day blanking period after that.

Then, we will count and we will track them for a year.

We're looking for one-year follow-up.

We will continue to track them for three years after the study, as well, but we are doing one-year follow-up to go after the label from that standpoint.

So that's the basic protocol.

We've had lots of input from many EPs and surgeons around the country at all these leading institutions.

Dr. Ellenbogen and Dr. Wong are the two lead EPs, and we've also got several others that are bringing their expertise to bear, as well.

As it relates to the market opportunity, you are right, we will talk about that at the Analyst Day, but it's worth touching upon.

The concomitant business and the concomitant portion of our business, as you've seen, we've had a tremendous amount of increase over the last couple of years.

And, we continue to see that, that market is a very fruitful market for the next five to eight years as a growth market, both in terms of ablation and in the terms of the Clip.

So, that market alone is a great market.

I've talked about that before.

This market, which is the DEEP, we think this can change the game long term within cardiac surgery, in the sense that you can actually have a procedure that, today they're doing about 3,000 or so procedures a year.

And with the approval, we could then go out and repeat what we have done on the concomitant side and begin to educate and train so more patients can get served.

That market is $1 billion-plus market, once we get through the approval process and can get down that path.

So, we've got great markets in the short term, and then long term, the MIS market is really going to be an accelerator for us if you look out four-plus years.

So that was -- just as a follow-up to that, four-plus years is the timeline within which you think it will take to enroll the 220-odd patients and do the year follow-up on each of those.

Which it sounds like it's really about 1.5 years from the time the patient is first treated surgically.

Is that right, Mike?

That's exactly right.

If we anticipate that the first patient will be enrolled -- we just got the first patient enrolled, obviously, last week, but we've only got one site today up on IRB.

So, as we get more and more sites up and running, we're in good mode of enrolling by the July/August time frame of this year.

We anticipate it will take us about two years to get full enrollment.

We will have to wait a year to close that out, which would put you out to three years, and then we just have to gather the data.

So it's about 3.5 to 4 years, and then we have got to talk to the FDA about it before we anticipate approval.

Got it.

Perfect.

Thank you.

And then, Andy, thank you for the gross margin granularity.

Just one of the things that popped into my mind just as you were giving that guidance on the currency -- with respect to the currency.

Just as a point of clarification, the 70%, does that reflect current exchange rates?

It sounds like the gross margin will be impacted negatively if the dollar continues to strengthen.

I suppose it would be helpful to understand what your assumptions are with respect to the dollar as it relates to the bottom end of your guidance?

And on the other hand, what your assumptions are with respect to the volume leverage at the top end of your guidance?

I would assume it's the top end of your revenue guidance, but perhaps you could clarify there?

And thanks for taking the questions.

I would say, yes, on the leverage that you are speaking of would be at the top end of the revenue guidance.

On the exchange rate impact, when we initially did the guidance from 70% to 71%, we were looking at the exchange rates that are sitting around now.

So, if you do see further strengthening of the dollar, then that's the low end of the range, and then the potential downside risk on the bottom side.

Hopefully that answers --

And vice versa?

And vice versa, right.

Exactly.

So, if we obviously saw the opposite effect, then we would get possibly some leverage off of it.

That's right.

Perfect.

I will get back in queue.

Congrats again on a great quarter.

Rick Wise, Stifel.

Hi guys.

This is Drew Ranieri in for Rick.

Congratulations on the quarter.

Just a question for you, Mike, in terms of the overall market, just looking over the next 12 or 24 months, can you just talk about what you expect for procedural growth within mitral aortic and CABG?

And also, if I heard you correctly, are your training courses now moving away from procedure-specific and now going to advanced ablation?

I've got a clarifying question on it, when you say mitral aortic and CABG, meaning the overall growth of that in cardiac surgery?

Is that --?

Right, yes.

Our anticipation is that those markets, as we look forward over the next several years, that those will continue to be flat markets.

If you look at the database and you look at the growth in procedures over the last several years, what you have seen is that actually CABG went and dipped down a couple of years ago and then has come back the last couple of years.

We've seen aortic continue to grow as TAVR came out.

We anticipate that it will grow probably for another year slightly, and then level off to downward pressure, maybe three, four years from now.

Then, mitrals will continue to grow at a steady pace for the next four to five years.

And then, as new products come in that are more minimally invasive, could feel some pressure on that.

So, we've looked in depth at our thought process on that, but if you blend all that together, it's about a flat cardiac surgery market overall on a worldwide basis, which give us comfort on the numbers that we've got as we look at.

Quite frankly, today, only 27% of the patients, maybe up to 29%, depending on how you look at it, are actually getting treated when they have got Afib going in there.

So we believe that over the next five to eight years, we can move that 29% to 50% of those patients, and that's where we're really focused on the education front.

We are not deemphasizing the work we are doing on the basic didactic courses that we had from before.

It's a matter of adding the advanced courses for those surgeons that want to have a deeper dive discussion.

They want to get into understanding the different various techniques around mitral surgery versus aortic versus CABG, and so that's really where those deeper advanced courses come into play.

Most of these people are coming back.

Then, we've also got more in-person training courses, where they want to see those cases live and have DEEP conversations one-on-one with the surgeons, and we let them go visit some of those sites.

I'd say it's more additive than it is taking anything away from the other ones.

Okay.

Then, just a follow-up question to that.

Out of the 2,000 surgeons you've trained, do you have any idea of what percent of the procedure market that those surgeons are responsible for?

Thanks.

The 2,000 is international numbers.

About 1,500 domestic and about 500 outside the US.

I don't know what they represent globally on Afib surgery, because we don't know -- what we know is by account.

We can't track it by surgeon and we don't get that information.

We get it on an account-by-account basis.

Excellent.

Tom Gunderson, Piper Jaffray.

Hi.

Good afternoon.

Mike, maybe similar to what you did with DEEP AF, you could talk a little bit about the stroke trial.

It sounds like your discussion with the FDA cut some time off of the feasibility trial.

You said you have done 11, you were going to do 30, and the follow-up was six months.

So, we could have been another year out before the FDA got back to you, but you were able to consolidate a lot of information and get that.

Am I looking at that the right way?

I'd say that's probably half the story and it's a good part of the story.

They are both good parts.

Basically, what they came back with, exactly what you said, which is that the safety profile -- and we were doing a safety feasibility study.

But, if they looked at the totality of information from all the studies we've done where we have placed clips, they were very comfortable with that safety data and said we could move forward with the pivotal trial.

However, we were looking for a single-arm trial to be able to move pretty quickly into that.

And they have been very strong, not just in the meeting we had with them on December 3, but also at a subsequent meeting at the Afib Symposium in Orlando in January, where they basically said that we needed to do a randomized control trial.

Since then, I'd say, while they cut off time on the feasibility study, so there's no need to continue down that path per se, we do need to redesign it a little bit to figure out what, and if we could do on a randomized.

They are suggesting heavily against aspirin, is what they have talked about.

They have talked about it at an open forum at the Afib Symposium.

So, we have brought in the best experts that we know to give us some feedback on how we would do that, how we would get enrollment, and what that patient population would look like.

We're looking at the criteria by which we would bring it in.

So it might take a little time.

That's why I said we anticipate by the end of the second quarter we'll be able to talk about where we are going with the stroke trial on that front.

So yes, they did cut time, but also, they have had us reevaluate to look at what that trial looks like.

Now, what is interesting about that is the industry, stroke neurologists and EPs, are incredibly excited about the possibility of us going down the path and doing a study like this.

We have just to make sure the design is right so we can get enrollment to be at a nice brisk pace.

Got it.

Thanks.

Then, could you talk a little bit about how you're feeling about competition right now?

It sounds from this conversation this afternoon, and previous ones, that this is mostly about you building the market yourself in these particular zones.

Are you seeing any direct competitive efforts out there that would be slowing you down at all?

I don't know that I would say that there's any that are slowing us down.

We still continue to compete on the concomitant basis with Medtronic.

They continue to be -- they have got good products on the market.

We see them in lots of accounts, in particular on an international basis.

We definitely see them in our accounts there, so you never want to let your guard down.

We continue to, we believe, to gain market share and push and develop the market, like you said.

But, we're waiting for the day for them to possibly ever get back into the market, and we want to be ready to go after it.

They are still there selling and winning business today, but I would say that we are gaining share.

In terms of in the other parts of our business, there's minimal competition today, but those are really new markets.

The Clip business, we typically complete against sutures and really low-cost items on the open part of the business.

On the minimally invasive side, when you are doing minimally invasive ablations, there aren't really any competitors or many competitors, we don't see them out there in that space.

When it comes to the rest of our business, on the minimally invasive side, there are one or two small competitors that are in the space, that we continue to see out in the market, and they are very good competitors.

Got it.

That's it for me.

Thanks.

Danielle Antalffy, Leerink Partners.

Thanks so much.

Good afternoon, guys.

Thanks for taking the question.

Wanted to get a little bit more color about what's going on internationally.

Mike, when you were at our conference, you touched on a little bit where you guys are in the training process.

It sounds like there's still a ton of runway there.

So, just wondering if you could frame where the status is training internationally and how much more we have to go still there?

We've really just begun the training process internationally.

We have only trained 500 surgeons internationally, and there are 3,000-plus to eventually get to and train.

We've revamped the course.

We've taken the course from the US, brought it over there.

We have a medical director over there who is really leading the charge and helping us do a lot of the training.

Dr. Cox has also spent a good bit of time with us over in many of the developing countries and helped us with training.

So, we're doing a lot of training and investing heavily, but we've got many years of runway to invest in that space.

Not just in Europe, but also in China and in Japan and the Asian countries, as well, so I'd say we're in the early game of that.

The labeling is different there, so some of the training we can do over in Europe is different than the training we can do in the US.

We can train a little more aggressively on the minimally invasive procedure and also on the left atrial appendage.

So, we're part of sponsoring some programs that are over there, right now, that are things we would not do or be able to do in the US.

Okay that's helpful.

Then, I was wondering if you could comment -- I think it was a few months ago, there was a proposal or a physician wrote a letter of some sort, talking about RF ablation reimbursement, and seemed to believe it was -- the perception was that RF ablation reimbursement is overdone.

Wondering if you can comment on, just broadly, the reimbursement landscape in AF and how surgical ablation is well-positioned within that?

And, any potential upside should something change on the RF ablation side?

Yes, the RF ablation you're referring to -- I think there was an article that came out where they had mentioned that there was some pressure that was being had there.

I'd say that, that would be nice upside for us if that happened, but that's not something that we count on when we give our guidance or look at it.

We look at it as if everything is status quo relative to that, from that standpoint.

In terms of the reimbursement, there's really no changes in the reimbursement on the surgical side.

There haven't been any meaningful changes one way or the other.

As we've talked about on these calls before, when you look at the open portion of our business, it's all about better patient care.

It's about making sure you're taking care of that patient, getting them out of the hospital faster, and making sure that, that patient is recovering more quickly.

There's a lot of data to suggest that if you treat the Afib at the time, concomitantly, that patient will do better.

There's a lot of data and information that's coming down from that standpoint.

There was a recommendation at STS to move it to a Level 1A recommendation, by some committees and councils there, and they're making that recommendation to the STS.

That may, in fact, influence things long term, but I'm not sure that it will impact reimbursement.

I think what will more impact is that surgeons will understand that, yes, they should do this on every single case.

And they need to go out and get trained and make sure that they are doing it and thinking about it every time they go in and somebody has Afib.

So, I'd say that's the general reimbursement landscape, but we haven't seen anything else change in the last couple of months.

Okay, thanks.

That's helpful.

We have no further questions.

I will now turn the call over to management for any closing remarks.

Please proceed.

Thank you, everyone, for joining our call, today, and your interest in AtriCure.

Have a wonderful evening.

This concludes today's conference.

You may now disconnect.

Have a great day, everyone.