atrc-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_____________________________________________

FORM 10-Q

___________________________________________________________________________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____________to_____________

Commission File Number 000-51470

_____________________________________________

AtriCure, Inc.

(Exact name of Registrant as specified in its charter)

_____________________________________________


Delaware			34-1940305
(State or other jurisdiction of incorporation)			(IRS Employer Identification No.)

7555 Innovation Way

Mason, OH 45040

(Address of principal executive offices)

(513) 755-4100

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.001 par value	ATRC	NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Emerging growth company

☐

Non-Accelerated Filer

☐

Smaller reporting company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act: ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): YES ☐ NO ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class			Outstanding at October 28, 2024
Common Stock, $.001 par value			48,753,251

Table of Contents



		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2024 and 2023	4
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	23
PART II. OTHER INFORMATION		23
Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 5.	Other Information	23
Item 6.	Exhibits	24
Signatures		25

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Amounts)

(Unaudited)


	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	130,335	$	84,310
Short-term investments	—		52,975
Accounts receivable, less allowance for credit losses of $400 and $500	54,909		52,501
Inventories	76,546		67,897
Prepaid and other current assets	7,496		8,563
Total current assets	269,286		266,246

Property and equipment, net	43,537		42,435
Operating lease right-of-use assets	6,100		4,324
Intangible assets, net	58,352		63,986
Goodwill	234,781		234,781
Other noncurrent assets	3,012		2,160
Total Assets	$	615,068	$	613,932
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	31,736	$	27,354
Accrued liabilities	39,980		44,682
Current lease liabilities	2,715		2,533
Total current liabilities	74,431		74,569
Long-term debt	61,865		60,593
Finance and operating lease liabilities	12,548		11,368

Other noncurrent liabilities	1,203		1,234
Total Liabilities	150,047		147,764
Commitments and contingencies (Note 9)
Stockholders’ Equity:
Common stock, $0.001 par value, 90,000 shares authorized and 48,748 and 47,526 issued and outstanding	49		48
Additional paid-in capital	851,306		824,170
Accumulated other comprehensive loss	(147)		(993)
Accumulated deficit	(386,187)		(357,057)
Total Stockholders’ Equity	465,021		466,168
Total Liabilities and Stockholders’ Equity	$	615,068	$	613,932

See accompanying notes to condensed consolidated financial statements.

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ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In Thousands, Except Per Share Amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	115,910	$	98,290	$	341,030	$	292,702
Cost of revenue	29,117		24,421		86,125		72,147
Gross profit	86,793		73,869		254,905		220,555
Operating expenses:
Research and development expenses	20,960		20,354		61,221		53,119
Selling, general and administrative expenses	73,238		61,604		219,174		185,451
Total operating expenses	94,198		81,958		280,395		238,570
Loss from operations	(7,405)		(8,089)		(25,490)		(18,015)
Other income (expense):
Interest expense	(1,667)		(1,772)		(4,956)		(5,127)
Interest income	1,281		915		3,230		2,751
Loss on debt extinguishment	—		—		(1,362)		—
Other income (expense)	260		(62)		206		(40)
Loss before income tax expense	(7,531)		(9,008)		(28,372)		(20,431)
Income tax expense	322		47		758		218
Net loss	$	(7,853)	$	(9,055)	$	(29,130)	$	(20,649)

Basic and diluted net loss per share	$	(0.17)	$	(0.20)	$	(0.62)	$	(0.45)


Weighted average shares outstanding—basic and diluted	47,105		46,411		46,912		46,262

Comprehensive income (loss):
Unrealized gain on investments	$	15	$	701	$	800	$	2,169
Foreign currency translation adjustment	407		(276)		46		(257)
Other comprehensive income	422		425		846		1,912
Net loss	(7,853)		(9,055)		(29,130)		(20,649)
Comprehensive loss, net of tax	$	(7,431)	$	(8,630)	$	(28,284)	$	(18,737)

See accompanying notes to condensed consolidated financial statements.

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ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In Thousands)

(Unaudited)


	Three-Month Period Ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance—June 30, 2023	47,352	$	47	$	803,197	$	(338,213)	$	(2,609)	$	462,422
Impact of equity compensation plans	40	—		9,041		—		—		9,041
Other comprehensive income	—	—		—		—		425		425
Net loss	—	—		—		(9,055)		—		(9,055)
Balance—September 30, 2023	47,392	$	47	$	812,238	$	(347,268)	$	(2,184)	$	462,833

	Three-Month Period Ended September 30, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance—June 30, 2024	48,686	$	49	$	840,939	$	(378,334)	$	(569)	$	462,085
Impact of equity compensation plans	62	—		10,367		—		—		10,367
Other comprehensive income	—	—		—		—		422		422
Net loss	—	—		—		(7,853)		—		(7,853)
Balance—September 30, 2024	48,748	$	49	$	851,306	$	(386,187)	$	(147)	$	465,021

	Nine-Month Period Ended September 30, 2023
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance—December 31, 2022	46,563	$	47	$	787,422	$	(326,619)	$	(4,096)	$	456,754

Impact of equity compensation plans	829	—		24,816		—		—		24,816
Other comprehensive income	—	—		—		—		1,912		1,912
Net loss	—	—		—		(20,649)		—		(20,649)
Balance—September 30, 2023	47,392	$	47	$	812,238	$	(347,268)	$	(2,184)	$	462,833

	Nine-Month Period Ended September 30, 2024
	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders’ Equity
	Shares	Amount
Balance—December 31, 2023	47,526	$	48	$	824,170	$	(357,057)	$	(993)	$	466,168
Impact of equity compensation plans	1,222	1		27,136		—		—		27,137
Other comprehensive income	—	—		—		—		846		846
Net loss	—	—		—		(29,130)		—		(29,130)
Balance—September 30, 2024	48,748	$	49	$	851,306	$	(386,187)	$	(147)	$	465,021

See accompanying notes to condensed consolidated financial statements.

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ATRICURE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(29,130)	$	(20,649)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Share-based compensation expense	30,020		26,416
Depreciation	8,273		6,979
Amortization of intangible assets	5,634		3,655
Amortization of deferred financing costs	359		364
Amortization of investments	107		461
Loss on debt extinguishment	1,362		—
Other non-cash adjustments	725		972
Changes in operating assets and liabilities:
Accounts receivable	(2,238)		(8,940)
Inventories	(8,571)		(16,037)
Other current assets	1,107		(828)
Accounts payable	4,239		4,147
Accrued liabilities	(4,762)		4,314
Other noncurrent assets and liabilities	(757)		(400)
Net cash provided by operating activities	6,368		454
Cash flows from investing activities:

Sales and maturities of available-for-sale securities	53,668		63,815
Purchases of property and equipment	(8,766)		(9,212)
Proceeds from sale of property and equipment	25		—
Acquisition of intellectual property	—		(30,000)

Net cash provided by investing activities	44,927		24,603
Cash flows from financing activities:

Proceeds from revolving credit facility, net of financing costs	61,210		—
Payments on debt and leases	(62,598)		(731)
Payment of financing costs and bank fees	(1,069)		(60)
Proceeds from stock option exercises and employee stock purchase plan	3,875		4,873
Shares repurchased for payment of taxes on stock awards	(6,759)		(6,473)
Net cash used in financing activities	(5,341)		(2,391)
Effect of exchange rate changes on cash and cash equivalents	71		(167)
Net increase in cash and cash equivalents	46,025		22,499
Cash and cash equivalents—beginning of period	84,310		58,099
Cash and cash equivalents—end of period	$	130,335	$	80,598
Supplemental cash flow information:
Cash paid for interest	$	3,601	$	4,716
Net cash paid for income taxes	576		228
Non-cash investing and financing activities:
Accrued purchases of property and equipment	1,184		714

See accompanying notes to condensed consolidated financial statements.

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ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

1.DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business—The “Company” or “AtriCure” consists of AtriCure, Inc. and its wholly-owned subsidiaries. The Company is a leading innovator in surgical treatments and therapies for atrial fibrillation (Afib), left atrial appendage (LAA) management and post-operative pain management, and sells its products to medical centers globally through its direct sales force and distributors.

Basis of Presentation—The accompanying interim financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). All intercompany accounts and transactions have been eliminated in consolidation. The accompanying interim financial statements are unaudited, but in the opinion of the Company’s management, contain all normal, recurring adjustments considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (GAAP) applicable to interim periods. Certain information and footnote disclosures included in annual financial statements prepared in accordance with GAAP have been omitted or condensed. The Company believes the disclosures herein are adequate to make the information presented not misleading. Results of operations are not necessarily indicative of the results expected for the full year or for any future period.

The accompanying interim financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC. There have been no changes in the Company's significant accounting policies for the nine months ended September 30, 2024 as compared to the significant accounting policies described in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates—The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including inventories, intangible assets, valuation allowance for deferred income tax assets, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense, including share-based compensation expense. Estimates are based on historical experience, where applicable, and other reasonable assumptions. Actual results could differ from those estimates.

Segments—The Company's chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis, accompanied only by revenue information by product type and geographic area, for purposes of allocating resources and evaluating financial performance. Accordingly, the Company has determined that it has a single operating segment. The Company’s long-lived assets are located in the United States, except for $4,278 as of September 30, 2024 and $3,432 as of December 31, 2023 located primarily in Europe.

Earnings Per Share—Basic and diluted net loss per share are computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Since the Company has experienced net losses for all periods presented, net loss per share excludes the effect of 2,724 and 1,776 shares as of September 30, 2024 and 2023 because they are anti-dilutive. Therefore, the number of shares used for basic and diluted net loss per share are the same.

2.FAIR VALUE

The Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 820, “Fair Value Measurements and Disclosures” (ASC 820), defines fair value as the exchange price that would be received for an asset or paid to settle a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value:

•Level 1—Quoted prices in active markets for identical assets or liabilities.

•Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Table of Contents

ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of September 30, 2024:


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	—	$	106,137	$	—	$	106,137




Total assets	$	—	$	106,137	$	—	$	106,137

There were no changes in the levels or methodology of measurement of financial assets and liabilities during the three and nine months ended September 30, 2024.

The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2023:


	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Total
Assets:
Money market funds	$	—	$	77,864	$	—	$	77,864

Government and agency obligations	12,711		—		—		12,711
Corporate bonds	—		38,033		—		38,033
Asset-backed securities	—		2,231		—		2,231
Total assets	$	12,711	$	118,128	$	—	$	130,839

Contingent Consideration. The Company’s contingent consideration arrangements arising from the SentreHEART acquisition obligate the Company to pay certain defined amounts to former shareholders of SentreHEART if specified milestones are met related to the aMAZE™ IDE clinical trial, including PMA approval and reimbursement for the therapy involving SentreHEART’s devices. The PMA approval milestone expired December 31, 2023, while the achievement period for the reimbursement milestone expires on December 31, 2026. The Company assessed the projected probability of payment during the contractual achievement periods to be remote, resulting in no reported fair value as of September 30, 2024 and December 31, 2023.

3.INVESTMENTS

The Company had no investments as of September 30, 2024. Investments as of December 31, 2023 consisted of the following:


	Cost Basis		Unrealized Losses		Fair Value
Corporate bonds	$	38,514	$	(481)	$	38,033
Government and agency obligations	12,998		(287)		12,711

Asset-backed securities	2,263		(32)		2,231
Total	$	53,775	$	(800)	$	52,975

The gross realized gains or losses from sales of available-for-sale investments were not significant in the three and nine months ended September 30, 2024 and 2023.

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ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

4.INVENTORIES

Inventories consist of the following:


	September 30, 2024		December 31, 2023
Raw materials	$	38,087	$	36,751
Work in process	5,259		3,582
Finished goods	33,200		27,564
Total	$	76,546	$	67,897

5.INTANGIBLE ASSETS

The following table provides a summary of the Company’s intangible assets:


	September 30, 2024				December 31, 2023
	Cost		Accumulated Amortization		Cost		Accumulated Amortization
Technology	$	46,470	$	12,343	$	46,470	$	10,084
Patents	30,000		5,775		30,000		2,400
Total	$	76,470	$	18,118	$	76,470	$	12,484

The following table summarizes the allocation of amortization expense of intangible assets:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cost of revenues	$	1,125	$	960	$	3,375	$	1,440
Research and development expenses	761		739		2,259		2,215
Total	$	1,886	$	1,699	$	5,634	$	3,655

Future amortization expense is projected as follows:


2024 (excluding the nine months ended September 30, 2024)	$	1,885
2025	8,441
2026	9,535
2027	10,435
2028	6,535
2029 and thereafter	21,521
Total	$	58,352

6.ACCRUED LIABILITIES

Accrued liabilities consist of the following:


	September 30, 2024		December 31, 2023
Accrued compensation and employee-related expenses	$	34,509	$	39,425
Sales returns and allowances	3,153		2,503
Other accrued liabilities	2,318		2,754
Total	$	39,980	$	44,682

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ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

7.INDEBTEDNESS

On January 5, 2024, the Company entered into a credit agreement (Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent, and JPMorgan Chase Bank, N.A., as bookrunner and lead arranger (JPMCB), and Silicon Valley Bank, a Division of First-Citizens Bank & Trust Company, as Joint Lead Arrangers and Joint Bookrunners, and the lenders party thereto (Lenders). The Credit Agreement provides for an asset based revolving credit facility (ABL Facility) in an amount of up to $125,000. Borrowing availability under the ABL Facility is based on the lesser of $125,000 or a borrowing base calculation as defined by the Credit Agreement. The Company may request an increase in the revolving commitment by up to $40,000 (not to exceed a total of $165,000). A portion of the ABL Facility, limited to $5,000, is available for the issuance of letters of credit by JPMCB or other financial institutions. JPMCB in its sole discretion, may create swingline loans by advancing floating rate revolving loans requested. Any such swingline loans will reduce availability under the ABL Facility on a dollar-for-dollar basis.

At closing, the Company borrowed $61,865. The proceeds of the ABL Facility were used to terminate the Company’s outstanding indebtedness and final fee under the Loan and Security Agreement with Silicon Valley Bank (SVB Loan Agreement). Certain prepayment and early termination fees under the SVB Loan Agreement were waived at termination. The termination of the SVB Loan Agreement was treated as a debt extinguishment and the resulting loss on debt extinguishment is $1,362. As of September 30, 2024, the Company had borrowings of $61,865 and had borrowing capacity of $61,885 under the ABL facility.

The Credit Agreement has a three-year term, and all outstanding borrowings are due upon maturity of the Credit Agreement on January 5, 2027. Through January 2025, the Company's required minimum utilization of the ABL facility is 40% of the aggregate revolving commitment or $50,000. Subject to customary exceptions and restrictions, the Company may voluntarily prepay outstanding amounts under the ABL Facility at any time thereafter without premium or penalty. Any voluntary prepayments made will not reduce commitments under the ABL Facility. The Credit Agreement contains mandatory prepayment provisions which require prepayment of amounts outstanding under the ABL Facility upon specified events or Availability shortfall.

Future maturities of long-term debt are projected as follows:


2024 (excluding the nine months ended September 30, 2024)	$	—
2025	—
2026	—
2027	61,865
2028	—
Total long-term debt, of which $61,865 is noncurrent	$	61,865

The ABL Facility is subject to a facility fee of 0.37% per annum of the daily available revolving commitment and paid on a quarterly basis. Outstanding amounts under the Credit Agreement 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. All swingline loans bear interest at a rate per annum equal to the ABR plus the applicable margin under the Credit Agreement. Alternate base rate is equal to the greater of Prime, the NYFRB Rate plus 0.50% or Adjusted Term SOFR Rate plus 1.00%. The applicable margin on borrowings will adjust ranging 1.50% to 1.75% per annum for ABR borrowings and from 2.50% to 2.75% per annum for SOFR term borrowings determined by the average historical excess availability. Participation and fronting fees are accrued and paid on a quarterly basis.

The ABL Facility is secured by the assets of the Company, consisting of personal, tangible or intangible property, including certain outstanding equity interests of the Company’s direct subsidiaries, subject to limitations specified in the Credit Agreement. The Credit Agreement contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including but not limited to financial covenants relating to a fixed charge coverage ratio, a minimum liquidity requirement and a minimum excess availability requirement, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, specified agreements, restricted payments and prepayment of certain indebtedness.

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ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

8.LEASES

The Company has operating and finance leases for office, manufacturing and warehouse facilities and automobiles. The Company’s leases have remaining lease terms of less than one year to nine years. Options to renew or extend leases beyond their initial term have been excluded from measurement of the right-of-use (ROU) assets and lease liabilities as exercise is not reasonably certain.

The weighted average remaining lease term and the discount rate for the reporting periods are as follows:


	September 30, 2024		December 31, 2023
Operating Leases
Weighted average remaining lease term (years)	4.8		4.8
Weighted average discount rate	6.85	%	5.75	%

Finance Leases
Weighted average remaining lease term (years)	5.9		6.7
Weighted average discount rate	7.00	%	6.93	%

A letter of credit for $1,250 issued to the lessor of the Company's corporate headquarters building is renewed annually and remains outstanding as of September 30, 2024.

The components of lease expense are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease cost	$	423	$	325	$	1,187	$	960

Finance lease cost:
Amortization of right-of-use assets	262		255		785		765
Interest on lease liabilities	157		166		474		511
Total finance lease cost	$	419	$	421	$	1,259	$	1,276

Short-term lease expense was not significant for the three and nine months ended September 30, 2024 and 2023.

Supplemental cash flow information related to leases is as follows:


	Nine Months Ended September 30, 2024		Nine Months Ended September 30, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,206	$	905
Operating cash flows for finance leases	474		511
Financing cash flows for finance leases	774		731

Right-of-use assets and corresponding lease obligations related to new and modified lease agreements:
Operating leases	2,651		1,068
Finance leases	421		—

Table of Contents

ATRICURE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In Thousands, except per share amounts)

(Unaudited)

Supplemental balance sheet information related to leases is as follows:


	September 30, 2024		December 31, 2023
Operating Leases
Operating lease right-of-use assets	$	6,100	$	4,324

Current lease liabilities	$	1,558	$	1,447
Finance and operating lease liabilities	4,957		3,307
Total operating lease liabilities	$	6,515	$	4,754

Finance Leases
Property and equipment, at cost	$	14,765	$	14,620
Accumulated depreciation	(8,614)

SEC Form 10-Q filed by AtriCure Inc.