AtriCure Inc

NASDAQ:ATRC

Earnings Call Transcript 2021-Q1

[Operator]

Good afternoon and welcome to AtriCure's First Quarter 2021 Earnings Conference Call. My name is Mare [ph] and I'll be your coordinator for the call today. At this time, all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes.

I would now like to turn the call over to Lynn Lewis from the Gilmartin Group for a few introductory comments. Ma'am.

[Lynn Lewis, Investor Relations, Gilmartin Group]

Thank you. By now you should have received a copy of the earnings press release. If you have not received a copy, please call 513-755-4136 to have one emailed to you.

Before we begin today let me remind you that the company's remarks include forward-looking statements. Forward-looking statements are subject to numerous risks and uncertainties many of which are beyond AtriCure's control including risks and uncertainties described from time to time in AtriCure's SEC filings. These statements include but are not limited to financial results guidance, expectations regarding the timing of FDA review and expectations of product approval, expectations regarding the FDA's response and whether it will approve CONVERGE, the potential CONVERGE launch timing, the potential market opportunity for CONVERGE, and the adoption of the CONVERGE procedure. AtriCure's results may differ materially from those projected. AtriCure undertakes no obligation to publicly update any forward-looking statements.

Additionally, we refer to non-GAAP financial measures specifically revenue reported on a constant currency basis, adjusted EBITDA and adjusted loss per share. A reconciliation of these non-GAAP financial measures with the most directly comparable GAAP measures is included in our press release which is available on our website.

With that, I'd like to turn the call over to Mike Carrel, President and Chief Executive Officer. Mike?

[Mike Carrel, President and Chief Executive Officer]

Thanks, Lynn. Good afternoon, everyone and thank you for joining us. We hope that you are safe and doing well. We're off to a strong start in 2021. The $59 million in total revenue for the first quarter. This represents 3% sequential revenue growth over the fourth quarter of 2020 and largely reflects improving patient flow in the United States.

At the start of the quarter we experienced headwind from a decreased cardiac surgery procedures following the spike in COVID-19 cases which resulted in extended quarantines and a relocation of resources within hospitals. However, in March most areas in United States began to stabilized when we saw steady growth across all of our franchises. While we believe this recovery reflects some pent-up demand, we also saw improvement in procedure volumes in March. Encouragingly, we finished the quarter with momentum and this has continued in April.

Internationally, our performance was not as strong especially in parts of Western Europe due to COVID-19 resurgence and slowing vaccine rollouts. Similar to the experience in United States we began to improve in March. However trends in our international markets have not been as consistent and we expect continued volatility in the coming months. As begin the second quarter, we expect the upward trend to continue in the United States. Well we're hopeful the international markets won't prove; the outlook is less fair. We believe that worldwide cardiac surgery volumes remain below pre-pandemic levels. Conditions are improving but this healthcare crisis is not fully behind us yet. Therefore, we expect that we will experience some variability in the second quarter and further recovery as the year progresses.

Turning now to an update on our growth initiatives. Beginning with CONVERGE while we're closer to completing the PMA process. We cannot provide details of either a panel meeting or approval at this time. However, we are confident that we remain in a pathway to eventual approval and look forward to providing an update on this milestone shortly. Additionally, we continue to build a dedicated sales team and develop a robust infrastructure to support the commercial steps ahead.

Currently, our US sales and training team consist of more than 200 individuals in the field. Who are all critical to supporting our hybrid therapy growth? This includes 35 dedicated reps and clinical specialist and our EP focused hybrid sales team and over 30 professionals supporting nationwide training and educational programs. The opportunity ahead of us is very clear and our goal is for the hybrid convergent therapy to become the standard of care for the millions of patients with longstanding persistent Afib.

We're also making significant strides on aMAZE our other landmark clinical trial. The aMAZE study is a 600-patient randomized randomized-controlled trial designed to show superiority of endocardial catheter plus our LARIAT suture delivery device versus endocardial catheter ablation arm. We successfully completely patient follow-ups in early April and are now focused on analysis of the data. We remain on track for PMA submission of the aMAZE trial during the fall of this year and expect to release trial data following the submission.

In our Open franchise, we continue to make progress towards our 510(k) clearance of our new EnCompass Clamp in addition to the Open ablation platform where we have a market leader in cardiac surgery procedures for the treatment of Afib. We anticipate clearance later this year followed by a concentrated commercial launch at certain key centers in 2021 and a broad commercial launch thereafter.

As a reminder the EnCompass Clamp provides a simpler and faster approach to ablating the heart in open procedures and we expect this device to appeal to high volume cabin surgeons. As a result, we expect this new plant to deepen our penetration of the cardiac surgery market starting in 2022 and beyond. The collective opportunity and addressable markets for our open and minimally ablation platforms is well into the billions of dollars representing of hundreds of thousands of patients annually. This opportunity is complemented by the continued rise in less atrial appendage management procedures. We saw a record number of AtriClip LAA Exclusion devices sold in the first quarter and our Left Atrial Appendage management franchise accounted for 40% of worldwide revenue. Our track record is delivering LAM [ph] solutions over the past several years has contributed to revenue growth along with increasing interest in managing the Left Atrial Appendage. We're encouraged by the growing awareness at society meetings where the LAA management is the focal point of both sessions and discussions.

Switching gears to cryoSPHERE, our dedicated device for managing post-operative pain in thoracic patients. The cryoICE cryoSPHERE probe is gaining traction in the market. With sequential quarterly sales growth since launch and continuous addition of new accounts. Cryo nerve block which is included in our opening franchise revenue is one of the fastest growing parts of our business and accounted for approximately 6% of total revenue in the first quarter. Our unique technology uses a differentiated freezing method to block nerves from transmitting pain signals after cardio thoracic surgery providing a longstanding pain relief for these patients. We believe this therapy will drive accelerated revenue growth in the coming years.

Looking ahead while the pandemic is still impacting our lives. We are beginning to see some return of normalcy with the rollout of vaccines and the gradual lessening of socially restricted measures. The momentum with which we are moving forward it gives us hope. We're in a pathway toward recovery. Our team continues to execute and make achievements towards our strategic initiatives and we remain confident in our future that we're strongly positioned with multiple catalysts. We have underway to accelerate our revenue growth.

In closing, I would like to take a moment to thank Scott Drake and Mark Laning for their dedicated service and leadership on our Board of Directors. During their tenure, AtriCure has experienced tremendous growth and advancement of our mission to reduce the global Afib epidemic. We're grateful for their guidance over the years to our entire management team.

With that, I'll now turn the call over to Angie Wirick, our Chief Financial Officer to discuss more detailed results of the quarter.

[Angie Wirick, Chief Financial Officer]

Thanks Mike. Our first quarter 2021 worldwide revenue of $59.3 million increased 11% on a GAAP basis and 10% on a constant currency basis when compared to the first quarter of 2020. On a sequential basis, we experienced growth of 3% in our worldwide revenue from the fourth to first quarter. The sequential increase results primarily from our US business and improving trends in elective and non-elective procedures throughout March.

In the first quarter 2021, US revenue was $50.3 million a 16% increase from the first quarter of 2020. We realized double-digit re venue growth in each franchise in the US from the improvement in underlying procedure volume. US sales of appendage management products were $20.6 million up 18% over the first quarter of 2020. Open ablation product sales which include our cryonerve block business were $21.1 million up 10% over 2020. Minimally invasive ablation sales in the US were $8.4 million up 28% from 2020 reflecting increased elective procedures year-over-year and growth EPi-Sense revenue.

International revenue was $9 million down 8% on a GAAP basis and down 13% on a constant currency basis as compared to the first quarter of 2020. As Mike mentioned earlier, we experienced more pressure in our international markets largely related to conditions in Western Europe as a result of COVID-19. Touching briefly on a few key metrics for the first quarter of 2021 gross margin was 75.1% up 200 basis points from the first quarter of 2020. This improvement was driven by both geographic and product revenue mix.

US activity accounted for 85% of our worldwide sales compared to a range of 80% to 82% historically. Specific products contributing to a more favorable gross margin include heavier EPi-Sense and AtriClip FLEX - V and Pro - V device sales. We have an adjusted EBITDA loss of $4.7 million compared to an adjusted EBITDA loss of $6.1 million for the first quarter of 2020. While operating expenses increased year-over-year the improvement to the bottom-line results show revenue growth outpacing our investments.

Our loss per share was $0.38 in the first quarter 2021 compared to $0.42 loss per share in the first quarter of 2020 while the adjusted loss per share each period was $0.32 and $0.36 respectively. Now moving to detail and operating expenses for the quarter. For comparability I will exclude recurring effects of non-cash adjustments the contingent consideration liability from my comments.

Total operating expenses increased $6 million or 12% from $51.9 million in first quarter of 2020 to $57.9 million in first quarter of 2021. The change results mainly from increased variable cash and stock-based compensation offset partially by lower clinical trial expenses, reduced travel and discretionary spends for trade shows and internal meetings. Certain areas where we are currently experiencing savings such as travel and meetings are influenced by the pandemic and we expect cost to restored to historical levels as our top line improved and travel, training and events increased.

We ended the first quarter with $236 million in cash and investments. As a reminder our first quarter cash burn is typically higher than the remainder of the year based on cash tax payments due upon stock vesting and annual variable compensation payout. We expect our quarterly cash burn to reduce significantly for the remainder of the year. And lastly, we're pleased with a recent development in the Department of Justice investigation specifically their decision to decline intervention in the underlying case.

And finally, turning to our outlook for 2021. We now expect to achieve approximately $252 million to $256 million in revenue for the year. Given the momentum we observed exiting the first quarter, we project to reduce impact from COVID in the second quarter. As Mike mentioned earlier, we continue to experience procedural volumes generally operating below normal with regional variability. In addition to reiterate our view for the remainder of the year. We expect cardiac surgery procedure volumes to continue to improve steadily through the year resulting a sequential quarterly revenue growth for the remainder of 2021.

While we're pleased to report 75% gross margin in the first quarter. This result was largely driven by very favorable geographic mix which we believe was unique to the quarter. As we scale our operations in the coming years. We do expect our business to reach and maintain a 75% gross margin consistently. And we continue to expect adjusted EBITDA to the loss of approximately $10 million for the full year 2021. With improvements to the top line throughout 2021. We should realize a corresponding improvement in quarterly adjusted EBITDA. We also continue to expect adjusted loss per share for 2021 to be approximately $1.15.

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

[Mike Carrel, President and Chief Executive Officer]

Thank you, Angie. We want to end by thanking healthcare workers in the scientific community for helping the world overcome this pandemic. As we move toward recovery, we're excited about the path forward for AtriCure. We're also pleased with the appointment of Kris Johnson as our Board Chair. Her extensive experience in medical device and growth-oriented companies will be invaluable as we deliver on many of our catalyst that we've talked about earlier today. Our outlook remains bright and with accelerated and sustainable growth over the long-term.

Thank you again for joining us today and with that, we'll turn it over for questions.

[Operator]

[Operator Instructions] your first question comes from the line of Robbie Marcus from JP Morgan. Your line is now open. You may ask your question.

[Unidentified Analyst]

This is actually Liliann [ph] for Robbie. Thanks for taking the question. So on CONVERGE. It sounds like you guys already know what they'll be progressing approval or approval without a panel. So what's helping you that fact from moving forward here. What are your conversations with the FDA been like recently and is it still reasonable to assume some sort of update in the first half of the year? And then I just have a one quick follow-up. Thanks.

[Mike Carrel, President and Chief Executive Officer]

It's very reasonable to assume that we're going to update very shortly as I mentioned in my comments and you're right, we do know the answer to the question you did asked, relative to that. What's holding up is just we just need paper in hand from the FDA. Once we have that, we'll be able to announce whether or not it's going to panel or we've got the approval. As I mentioned in my comments though, obviously you've seen all the data. We feel very confident that in our eventual chance of getting approval there. So that's really what we can say about the CONVERGE piece at this time.

[Unidentified Analyst]

Okay, great. Thank you. And one just quick follow-up there. Any color you could provide on the exit rate coming out of March and how that's continued into April and what sort of cadence over the year, your guidance range assumes? Thanks so much.

[Mike Carrel, President and Chief Executive Officer]

We exited strong. I don't know what exit rate per se means. But we exited the month of March. March was very strong. It really picked up at the end of February and continued into March, that rate has continued into the month of April as well as I mentioned during my remarks. We do anticipate that we'll have a - I think if you think about the revenue. We'll be better in the second quarter than we initially anticipated and the back half of the year we'll continue to be strong as we had anticipated. We had already put into our numbers and our guidance originally really having a strong back half of the year. So most of that is going to probably come into the second quarter which is where we kind of have some of the softness and our original guidance that we've now updated and increased.

[Operator]

The next question comes from the line of Rick Wise from Stifel. Your line is now open. You may ask a question.

[Rick Wise, Stifel]

Maybe focus on a couple of your major growth drivers and just sort of, I guess my question sort of what's next. I mean, maybe just help us appreciate given the amazing Left Atrial Management performance. What's next that separate from recovery might help sustain it - continued product rollout? Just if you could give us a little more granular sense of your confidence in that area specifically.

[Mike Carrel, President and Chief Executive Officer]

I appreciate the question, Rick. We're at late point in Afib history I might move that some considerable catalyst coming down the pipeline over the next several years that are going to drive the growth. You're seeing some of it in our numbers to some degree. The first and foremost, obviously CONVERGE that will drive our MIS business. You saw, we had a really strong MIS quarter. A part of that is because of the impact of COVID. But part of that's also because the data has been out there since May of last year and people have seen that data at HRS and other places and lots of inbound inquiries and comments and people that are very interested and kind of adopting that.

We think that's going to be a significant driver to our growth. You add Left Atrial Appendage on top of that. We're actually seeing an increase in a percent attachment of the AtriClip to the CONVERGE procedure specifically and so that's also driving some of the short-term. We think that's going to continue so that as the CONVERGE or the Hybrid therapies growth you're going to get the clip-on top of that and eventually possibly even some LARIAT's with the aMAZE data.

So getting to the second piece, which is on Left Atrial Appendage? We've got a rich pipeline of not just great products with the AtriClip. But obviously with aMAZE having fully enrolled and followed up on that trial. Now we're compiling the data. We're in a great position that within a couple of years to getting approval on that and then move that forward as well as another standard of care. You combine that with CONVERGE and really, we're the only one that will be out there with that kind of robust ability to serve this huge market which is the longstanding persistent patient population.

On top of that, we do have other catalyst coming down the pipeline. I mentioned in EnCompass getting clearance on that. The penetration rate still is ridiculously low in cardiac surgery for treating the Afib patients. We believe EnCompass will help with that for sure and then on top of that, you've got your pain management franchise where we're really building up that team quite aggressively right now. We plan on almost doubling it probably over the next 12 to 18 months every time we add some of the new area. There's great interest and it continues to drive growth as you've seen we've had sequential growth every single quarter since rolling out that product.

[Rick Wise, Stifel]

Yes, thanks for that. And maybe one for Angie on gross margin. You're very clear that the first quarter I think that must be record gross margin AtriCure or certainly in my memory. But how do we think about - I guess two things really is that, I want to make sure I understand was it that international was so weak or the products were so strong and that won't sustain because international is going to recover and so that'll be the drag. I'm not sure I understand if clear, I like the dynamics there and again, how do we think about for the rest of the year. Are you suggesting we should be thinking about 72%, 73% and then roughly that for the year is that the right way to think about it, Angie?

[Angie Wirick, Chief Financial Officer]

Rick, you have a great memory, 75% this quarter is one of our best in most recent history. The unique mix that we saw was the US contributing 85% of total revenue. We typically are 80% to 82% with the US contribution and so we'll see what we'll expect for the rest of the year is international to rebound and play a bigger percentage of the overall revenue and that's headwind when we think about margins coming down from 75%. Our full year outlook I think will show some modest improvement of where we've been historically and continue to take and progress towards 75%. But that on a consistent basis is a more long-term target in the coming years.

[Operator]

Thank you. Your next question comes from the line of Mike Matson from Needham. Your line is now open. You may ask your question.

[David Saxon, Needham]

This is David Saxon for Mike. Thanks so much for taking the question. I guess first on the hybrid sales team. If memory serves there weren't any new hires this quarter. So I guess are you guys happy with the [indiscernible] team going into a potential convergent approval or do you expect to make additional hirers. And then other than approval anything else that needs to be accomplished before you launch?

[Mike Carrel, President and Chief Executive Officer]

We're actually adding, we'll be adding significantly to the hybrid team over the coming years. We feel like we're ready for the launch. We're in a great position with a number of reps would actually added kind of a management layer where we've converted some of the reps into area of Director. So now that six areas are on the country, that team is fully staffed now and then we're fully backed for them. So actually have been hiring. But it's more been kind of backfilling some of them who have been promoted to take on larger management roles on that front and we'll continue to hire [indiscernible]. But we're well positioned. We go the country covered. We feel like we're in a really good place on that front.

On top of that, I mentioned about the education and training team. In order to really role this out effectively we've got to have a robust team there and we'll continue to add to the number of people we've got on the education and training team as well. And so yes, we'll continue to add headcount over the course of the year.

[David Saxon, Needham]

Okay, great. I guess just one on guidance. You're raising revenue but maintaining EBITDA. So I mean I guess other than the new hires. Any other investments that you want to call out, that I guess is resulting in maintaining that EBITDA loss guidance. Thanks so much.

[Mike Carrel, President and Chief Executive Officer]

Sure I mean, go on Angie. You got it.

[Angie Wirick, Chief Financial Officer]

We typically see a heavier loss in the first quarter and some of the project spend shifted out. I mean you called it out. We're leaning into our catalyst for the future and adding to the team and adding training and education program, anticipating pretty sizable launches the rest of this year. That's the kind of the thought behind the $10 million and managing to that bottom line number.

[Operator]

Thank you. Your next question comes from the line of Danielle Antalffy from SVB Leerink. Your line is now open. You may ask your question.

[Danielle Antalffy, SVB Leerink]

Mike, I just wanted to follow-up on a prior question as it relates to the revenue guidance. Maybe this is just the street sort of miss modeling Q1. But you mentioned, you now are seeing potentially better momentum than previously expected heading into Q2. You beat the consensus number by a $2 million. But you're only taking it up by about the beat. It looks like at the midpoint of the range. So just curious about, if you could help bridge us there. It's just sort of normal conservatism. I know you guys tend to be on the more conservative side and then I have one follow-up.

[Mike Carrel, President and Chief Executive Officer]

Sure, I've looked at it is, we do anticipate that we'll have strength in the second quarter. We're just making sure that this continue, it has continued in strength in April obviously with just some uncertainty as you kind of come out of the pandemic here, just making sure that Q2 is in a solid place from that standpoint overall. And then the back half shouldn't change much from what we have previously guided to.

[Danielle Antalffy, SVB Leerink]

Okay, that's fair and then I guess my follow-up question. On CONVERGE sort of you mentioned fully prepared to launch. But I guess just from a strategic perspective. How should we be thinking about the early days of the launch and how quickly this can ramp and how much upside there could potentially be to your guidance depending upon when we get news on CONVERGE and when this actually comes to market?

[Mike Carrel, President and Chief Executive Officer]

This year is going to be obviously there's always the potential for upside on CONVERGE. But it's mostly really due to COVID. As COVID comes back and I think that's what we saw in March and has continued in the April timeframe. Just as hospital beds open up and they're allowing these procedures to occur. That's what going to drive the upside for us in 2021. Both on both sides of our business inclusive of our pain management side and obviously on the ablation side of our business as well.

So that's really what's going to drive the upside in 2021. CONVERGE will clearly be a driver for significant growth in 2022. That's really where we see CONVERGE and the clip-on top of that because of the attachment rate that we anticipate getting with it. That's where you'll start to see kind of some acceleration from those two in 2022.

[Operator]

Thank you. Your next question comes from the line from Matthew O'Brien from Piper Sandler. Your line is now open. You may ask a question.

[Matthew O'Brien, Piper Sandler]

Mike, just to push a little bit on CONVERGE. I think coming out of the Q4 call, lot of us kind of expected it's going to be soon in terms of the decision one way or the other so. I think for investors it might be helpful just to talk a little bit more about. I think you said you had it a sense for it back then. You felt pretty good about it back then and now we're going to fast forward a couple of months. It's much of the same. Is there something it's a little more tangible that we can bite down on, that helps us understand what the delay from how we see it might be in terms of getting that paperwork. Is that an administration change? Is that a reviewer? Slow down at the agency? Is there something specific that's a little bit more tangible that we can look to?

[Mike Carrel, President and Chief Executive Officer]

A little bit all the above, I would say. It's all administrative at this point. And I feel really good about kind of - I wish I could say that [indiscernible] one hand or I had something to kind of announce to on a date. But I don't and I can't and I think it's an administrative thing more than anything else. If you think back to the quarter. They did do a panel meeting. That definitely took. It was the same team that has been on top of ours, that was part of the panel meeting that occurred this quarter that definitely obviously was in the level of I think review and time that they had to spend on that was probably more than they had expected which obviously causes some aspect of delay on our side.

The Interim Branch Chief did leave but the person that came in has done a wonderful job. Again, we had a really good collaborative pieces. But it's been mostly on the administrative side to your point in terms of any kind of delay from your perspective. Again I wish I could say something today obviously I can't. I understand why you're asking that question. But I'd say it's much more of an administrative thing than anything else. There's nothing fundamentally wrong in anyway shape or form other than that.

[Matthew O'Brien, Piper Sandler]

Okay, that's very helpful. Appreciate that. And then on the US MIS business there's some catch up although it sounds like January pretty much for everybody was pretty soft, so I'm sure there was some slowdown there. But some catch up maybe in March. But if you look at things on a two-year stack. You have not put that level of growth in the MIS business over the last 2.5 years. So clearly something is going on outside of maybe some catch up and procedural volumes. Is there any point to in terms potentially new clinicians or deeper in existing accounts or anything along those line that hey it's taken a while for people to look at the data, process to get there, program's up and running and now they're starting to do more cases, anything on those lines?

[Mike Carrel, President and Chief Executive Officer]

You're definitely seeing a combination of two things. I mean one is that, the first thing that got impacted by COVID was for sure the MIS side. So you've got really week end of March in 2020. But your point is valid, we do have - the data has been out there now. It's been presented. It's been presented at HRS in May of last year. HRS did a special session on it, in November and then the long-term data came out in January. I'd just say the totality of evidence that continues to come out, they put out and published around this procedure continues to show that it is an incredibly durable procedure that works very well in these sick patients and so you're starting to see more and more programs for sure get up and running and those that were doing it, begin to come back and say, wait a second. I'm willing to take a second look at that and begin to go down that patent. So I think that you're definitely starting to see the beginning of that happening for sure.

[Operator]

Thank you. Your next question comes from the line of Bill Plovanic from Canaccord. Your line is now open. You may ask a question.

[Bill Plovanic, Canaccord]

On CONVERGE just to clarify I know three questions have been asked. There is no final data or any animal or any type of data you need to provide. It's truly admin. You're just waiting on it at this point and then my follow-up question is just relative to your R&D spend and Angie spoke about the investment a bit. But I was wondering if you could provide a little more granularity on kind of what you're really working on there? Thanks.

[Mike Carrel, President and Chief Executive Officer]

Sure. Just to clarify it is admin and there's no additional work to be done on data for animals or anything else relative to this. It is purely at this point in time an administrative piece. I'll turn it to Angie maybe to give some more details on the R&D spend.

[Angie Wirick, Chief Financial Officer]

Sure, Bill. Couple other key areas [indiscernible] are the continued work on the aMAZE trial. Patient follow-up during the quarter. We also have the continued access protocol with aMAZE that includes new patient enrollment in that particular study. Couple other clinical trials ongoing. I'd say further deep and then from a product development perspective you're seeing pretty heavy spend within EnCompass that's been new opened, clamp and then few other projects that are in the pipeline that you'll hear about from us in the coming years.

[Bill Plovanic, Canaccord]

Okay and if I could throw a follow-up in there. Just I think one of the questions we get is, as we talk about the aMAZE trial and LARIAT coming is. How is that going to fit into the portfolio if you think about having the AtriClip out there? You've got the CONVERGE bring [indiscernible] and then now you're going to have the LARIAT as well.

[Mike Carrel, President and Chief Executive Officer]

Yes it [indiscernible] it's actually going to be used by the interventionals. Whether it's the electro physiologist or an interventional cardiologist primarily EPs at this point in time. But it really kind of gets us into that realm, has a product for them to put into their hand to serve in the same way that the AtriClip does. I mean it's got obviously very similar characteristics and that it's epicardial from the outside. It's less invasive and so there's obviously trade outs both ways.

Our strategy is that, we believe that in combination with other ablation techniques can really improve the Afib outcomes. If you take the appendage out completely. It does not leave anything inside and is a superior technology overall. And so we feel like we're going to be in a really good position to be able to offer that. That you're going to be able to reduce the Afib and we've already shown that with the clip from electrical standpoint. We're obviously suited to prove that out with the aMAZE trial and that's going to position us well to have really kind of holistic robust solution and give them the choice to make.

[Operator]

Thank you. Your next question comes from the line of Suraj Kalia from Oppenheimer and Company. Your line is now open. You may ask a question.

[Suraj Kalia, Oppenheimer and Company]

Mike, two questions from my side. Just piggybacking on Bill's question. So Mike, it's a full gone to conclusion. aMAZE will show positive outcomes since [indiscernible] and AF burden reduction with the use of LARIAT. So I guess when you're looking at the complete portfolio right. I'm more interested in AtriClip versus LARIAT. Like you said the end user is different. The reimbursement pathway for the physician is different. Help us understand how should we expect a product bifurcation within the [indiscernible] management itself. Moving forward how should we think about - will there be a pull through for the AtriClip or is it going to be loss to LARIAT because LARIAT is going to be the one with tangible data, I would say within the framework of the aMAZE trial.

[Mike Carrel, President and Chief Executive Officer]

Yes, I think it's going to be a little bit of both. It's a very good question and I actually think it's one of our differentiators and that we're going to actually offer up for the physician to provide with their patient choices and what's going to work best for that particular facility in terms of how they best want to treat their patients. Some physicians are going to be very comfortable are not going to go down the LARIAT pathway and we'll be able to support them. Some really like what they get out of the clip and we'll be able to support them.

Right now the clip is what we have that's in the market and so that's what becoming and getting attached LARIAT really is not out there yet. Once we get the aMAZE data, we get the aMAZE approved, that will obviously change several years down the line and then we'll probably have some questions asked, which way they want to go, the skill sets. Do they want to go down to LARIAT? Either way you're talking about managing the appendage and we're providing them with both options and both are really good options for them and we're not going to dictate to them which they go. We just want them to manage the appendage because we think it's in the best interest to the patient and so we're going to leave that up to them and it's interesting depending on the EP that you talk to some really want you to put on a clip and they don't ever see themselves going into the LARIAT world. Many others, they can't wait to see the LARIAT come down and then they'll move down that pathway and again we're going to be indifferent. We're going to do what's in their best interest and how they want to build that program out.

[Suraj Kalia, Oppenheimer and Company]

Got it. Mike on CONVERGE, if I listen to your comments then a logic dictates approval is imminent and we're going to bypass the panel. Help us understand the low hanging fruit and let's say for the next three to four quarters and the reason I ask is, in the past you guys have reported about at least memory tells me 3,000 or so procedures in CONVERGE have been done, correct me if I'm wrong there. But should we expect a step change in CONVERGE demand post approval or should we expect a gradual uptick because it is being used technically off label? Thank you for taking that question.

[Mike Carrel, President and Chief Executive Officer]

Well it's actually being not used off label. So I just want to make I was to going to address that. I mean we do have a very strong label today for cardiac tissue ablation and so that is how the parts being used today. It's absolutely an on-label use of the product today even before the approval does happen. Now that being said, in terms of the question you asked relative to what does this mean for an uptick. You put it out three or four quarters.

We really view this as you'll start to see some accelerated growth in 2022. 2021 whenever the time is that we actually get there again led by panel or by an official approval before hand. What that's going to look like is getting sites up and running. We've got them segmented every territory has picked up key sites. They're going to go into, make sure that they've utilized beachhead in every area of the country. We're being very strategic about going after them, building up those programs, learning from that and then kind of building out and accelerating.

We think that we want to take the rest of this year regardless of when we get that approval to really kind of build that up. And we're starting to see some of that happened organically already even before the approval because we're getting approached by certain sites. That being said, 2022 we do anticipate that's when you'll begin to see the ramp and mainly, I don't know if I would call that low hanging fruit. But I would say that, you'll start to see the ramp in terms of having programs that are more established and able to kind of take advantage of the training and education we're providing.

[Operator]

[Operator Instructions] next question comes from the line of Marie Thibault from BTIG. Your line is now open. You may ask a question.

[Marie Thibault, BTIG]

I'll ask both of them here right up front. On two new products that we haven't really touched on too much today in the discussion. The first is on cryo nerve block. I think you said in your prepared comment 6% of total revenue which is certainly a material and impressive. Wondering what in terms of the investments that you mentioned you're making, what more you can be doing there to expand use of cryo nerve block and sort of where you see that product to go in terms of helping the open market grow faster.

And then secondly on EnCompass. It sounded like this could be something that's material to revenue in 2022. What are sort of your early plans to once that's approved get that into the hand of the cardiac surgeons and encourage use there and appreciate the question.

[Mike Carrel, President and Chief Executive Officer]

Great. Well thank you Marie, appreciate the question. On pain management cryo nerve block. You're right it's an exciting part of your business that we have invested and we've added significantly the headcount on that team. We've got around 20 or so people on the field right now that continues to grow. So the number one major investment is to get people to cover the United States. We need to get coverage in all major cities and areas because when we do that. Now that we've learned the pattern for how to actually open up the city and get the right person and get them trained.

The training is less than what you would see on the Afib side of it. So we can kind of have an impact a little bit more quickly and we do anticipate that will continue to accelerate as this year goes on and then the next year. It's going to continue to be a bit part of our business and a growing part of your business for years to come. The key to us is again getting more and more people out there to getting coverage. That's where the major investment is.

The second piece that we need to invest in is really continuing to get clinical data. You've heard me talk about all drug therapies. We really believe clinical data matters. It does change the way people can treat and so as a result of that. We will probably continue to invest in various different trials. Not necessarily IDE trials but we'll invest in trials so that we can get data to probe out the therapy even further than what the data already suggest and shows.'

The third piece really is eventually getting it into Europe and we have applied for and are looking to try to get that into Europe over the coming years and so that's going to be another one that we anticipate being somewhat upside to us. They're chomping [indiscernible] to use it, to hear about at conferences from the US and they definitely want access to the cryoSPHERE products.

As it relates to EnCompass it's a great question. EnCompass is a great product. We're really excited about it. As I mentioned in the call earlier. What we see is, we believe that's going to enable us to continue to grow into that kind of mid-to-high single digits in the open franchise for years to come. That really kind of helps ups build upon it so that cardiac surgery isn't necessarily growing area. But we believe through penetration and getting more people to use products that's what EnCompass allow us. You're not going to have hockey stick kind of growth curve you're going to see with the clip or the LARIAT or the cryo nerve block or the EnCompass. Excuse me the in-contact product that is now up to sense and so that is really where you're going to start to see those are going to be big inflection points. EnCompass is going to be steady as she goes.

[Marie Thibault, BTIG]

Thank you, Mike.

[Operator]

There are no further question at this time. I would like to turn the call over to Mr. Mike Carrel for closing remarks.

[Mike Carrel, President and Chief Executive Officer]

Great again thank you everybody for joining us today. We really appreciate, you listening in and learning about all the great catalyst and the wonderful quarter we have and 2021 is going to be a banner year. Appreciate it. And have a wonderful evening. Bye now.

[Operator]

Ladies and gentlemen, that concludes today's conference call. Thank you all for participating. You may now disconnect.