Lynn C. Pieper – Managing Director, Westwicke Partners LLC Michael H. Carrel – President and Chief Executive Officer M. Andrew Wade – Vice President and Chief Financial Officer

Thomas Gunderson – Piper Jaffray Jason Mills – Canaccord Genuity Danielle Antalffy – Leerink Partners

Good afternoon and welcome to AtriCure’s First Quarter of 2014 Earnings Conference Call. My name is Sue, and I’ll be your coordinator for the call today. At this time, all participants are in 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’d now like to turn the call over to Lynn Pieper, AtriCure’s Investor Relations Consultant from Westwicke Partners for a few introductory comments.

Thank you. By now, you should have received a copy of the earnings press release. If you’ve not received a copy, please call 513-755-4136 to have one e-mailed 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. AtriCure’s results may differ materially from those projected on today’s call. AtriCure undertakes no obligation to publicly update any forward-looking statements. 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 the company’s website. With that, I’d like to turn the call over to Mike Carrel, President and Chief Executive Officer of AtriCure. Mike?

Thank you, Lynn. Good afternoon and thank you for joining us today. We’re off to a promising start to 2014, and we are pleased to report a strong first quarter results. I’ll start today’s call with a quick overview of our results for the quarter followed by an update on the business, new product developments and our clinical trial progress. Then I will turn the call over to our CFO, Andy Wade, who’ll provide an overview of our financial results. After that, I’ll come back to make concluding remarks and open it up for questions. First, based on the strength of our quarter, we are updating our guidance for 2014 to a revenue range of $101 million to $104 million, reflecting growth of approximately 23% to 27% year-over-year on a GAAP basis. This includes contribution from products acquired in the recent Estech acquisition. Andy will get into more detail about our financial performance and outlook in his section. Turning to the quarter, our first quarter revenue reached $24.8 million or an increase of 28% compared to the first quarter of last year. Growth was balanced across both U.S. and international with great strength on the international side. Highlights of our U.S. performance for open heart sales, which were up 14%, and AtriClip sales, which were up 52% in the quarter. Our solid international sales were driven by key contributions from the UK, Germany, Italy and China. We are now reporting OUS sales by product category, and in the quarter, OUS open was up 22% OUS MIS up 50% and OUS clip sales up 122%. Moving to the integration of Estech. We are pleased with the progress that we have made integrating our teams, products and development activities. Our early experience confirms that we’ve added the right products, pipeline and people…

Thank you, Mike. From the first quarter of 2014, revenue increased 27.9% to $24.8 million. Revenue from product sales in the U.S. was $18.1 million, an increase of 23.9% from the first quarter of 2013. Revenue from open chest ablation-related product sales in the U.S. increased by approximately $1.3 million to $10.4 million, and U.S. sales of products used in minimally-invasive procedures increased approximately $316,000 to $3.4 million. U.S. sales of the AtriClip system during the first quarter of 2014 were $3.6 million as compared to $2.4 million for the first quarter of 2013, an increase of 51.7%. International revenue grew 39.9% on a GAAP basis, and 36.4% on a constant currency basis as compared to the first quarter of 2013 to $6.7 million. Valve tools sales totaled approximately $1 million worldwide, $698,000 in the U.S., and $287,000 in the international markets. Gross margin for the first quarter of 2014 was 71.1%, as compared with 72.5% for the first quarter of 2013. As expected, the sales of products acquired in the Estech transaction put some pressure on the overall gross margin. Additionally, the international sales mix was higher in 2014, which also has a negative impact on gross margin. Pricing remained relatively steady. Operating expenses increased 61% or approximately $9.7 million from $15.9 million for the first quarter of 2013 to $25.6 million for the first quarter of 2014. Research and development expenses, which include clinical activities were $4 million for the first quarter of 2014 or 16.1% of sales, an increase of $495,000 over the first quarter of 2013. SG&A increased approximately $9.2 million from the first quarter of 2013 to a total of $21.6 million or 86.9% of sales. The increase was due primarily to increases in selling, marketing, product development and training costs. Our operating loss for…

Thank you, Andy. In sum, we’re off to a good start in 2014. AtriCure is positioning itself as a leader in the treatment of Afib and we will continue to set the foundation for the company to achieve consistent future growth. We support our positions with solutions they need for their patients by delivering to the market a full suite of innovative and unique products and continuing our commitment to training and education. We look forward updating you on our progress during future calls and we’ll now open the call to questions.

Thank you. (Operator Instructions) Thank you. And your first question comes from the line of Tom Gunderson, Piper Jaffray. Please go ahead.

Hello. Thomas Gunderson – Piper Jaffray: Question on U.S., one question on international.

Okay. Thomas Gunderson – Piper Jaffray: The U.S. question is, I’m curious about what we’ve called the same-store sales in the U.S., you’ve been on a huge ramp of training and getting new guys in and getting old guys back up to speed. I’m curious if you’ve looked at some of those maybe late 2012 stocks that came back into the fold or early 2013 stocks and what kind of experience you’ve seen with their programs?

Great question, Tom. What we’re seeing from an expense, we do look at actually we track people that come to training and their revenues six months before, six months out, nine months before the training and then 12 months. And it’s actually very consistent in terms of the number that we’re seeing. Overall, we’re seeing an increase and those that are actually coming through the training process that we’re seeing about a 30% overall net increase. What’s interesting about that is that, we’ve got about 67% to 70% increase in those that are actually have to see increases and then there are some accounts that maybe doctor has moved on or they’ve moved to different sites, and so we’re seeing some decreases, so actually in those accounts that are increasing we’re seeing even a larger number there. So we do track that, look at that very closely, and we’re seeing some good penetration. I know on previous calls we’ve talked about the fact that some of our gains were based on share gains, and I think and it was a 50-50 split I talked about before. And now I think we’re starting to see more coming from same-store sales to use your terminology, where more of those sites are actually buying from us, and then we’re getting increased penetration there. Just because we don’t have as much, as many competitive accounts to necessarily turn that quickly anymore. Thomas Gunderson – Piper Jaffray: And you said 50-50, is what it was, just venture where it might be now?

It’d be somewhat of a guess because I don’t know for sure, but I mean it’s moving probably more towards that 65-35 or so range, maybe 75, but it’d be – it’s a guess. We are still getting some competitive wins, but it’s not as large as when it was before. Thomas Gunderson – Piper Jaffray: Got it, thanks. And then the international question is, you mentioned plans for 2014 of international expansion in Q1, was any of that larger than expected number adding new countries?

It was not. We had a couple of cases in France, so we actually had our first shipments there, but it was a de minimis amount of revenues in that. A lot of our growth was just the investment that we made over the last 16 months or 17 months in the international infrastructure. It is starting to gain traction in all the areas. The UK, Germany and China are some of the key ones. UK, Germany and Italy were really driven a lot by also getting Estech’s sales. The Estech had a great international presence. I think I have mentioned in the call before, that’s really where we saw a tremendous amount of growth was on the Estech’s side. And the integration was a lot smoother in Europe only because we weren’t kind of playing in putting two forces together, what we’re doing there is we were kind of – it was more of a bolt-on. So, we could kind of split Germany up. We could add presence in the different area and there were so many different accounts. Whereas in U.S. it was really basically just rationalizing the sales forces and putting them into one. Thomas Gunderson – Piper Jaffray: Got it. Thank you.

Yeah.

Thank you. And your next question comes from the line of Jason Mills, Canaccord Genuity. Your line is open. Please go ahead. Jason Mills – Canaccord Genuity: Thank you, operator. Congrats on a great quarter, Mike and Andy. Can you hear me?

Yeah, loud and clear. Jason Mills – Canaccord Genuity: Great. And so, my first question is sort of correlate Tom’s questions. Specifically organic growth and I understand it’s kind of a complicated answer are at least some supposing it is, you’ve got organic growth in the base AtriCure business and then you’re adding Estech from based on due diligence. Obviously, the Estech is augmenting sales at the same time you’re melting it down. I would suppose maybe in some cases, where they would have used AtriCure products, may now be using Estech. So there is sort of a brighter lines there. But, I’m wondering, if you could tell me just as best you can on a Pro forma basis, the trends that you saw exiting 2013 second half of 2013 in organic sales. The trends in organic sales in Q1 and what you expect going forward taking into account sort of that phenomenon where you have the brighter end of line.

I think you stated it well, there is a little bit of blurring in the lines that’s typical to give specific numbers on that, but I would say that thematically maybe as opposed to trends hopefully this helps out a little bit Jason. If you look on the international side of the market, we saw faster growth for share both on organic and on adding up the Estech product line. I am adding, those are basically growing at a very nice pace and we really saw some of the investments that we made in 2013 start to take fold. If you recall last year, our growth rate in the U.S. was faster than international. And I’d originally anticipated that the international would grow a little faster, but these investments really had to take hold and we started to see that quite a bit. And we also saw because of those investments it was really simple to integrate the Estech team and technology. So that was on the international front. When you think about on the U.S. side of things, I’d say that let’s take it on kind of our product or kind of product category area. If you look on the open side of our business, we continued to see nice growth on that front, consistent with some of the numbers that we saw before. There is a little blurring of the lines primarily because on the Estech side, they did have clamps. They did have some open business. We don’t – that actually is a shrinking portion of the portfolio. There wasn’t a lot of focus with our team and the kind of the movements on the sales force there. But overall, we believe that it’s pretty consistent. The clip sales continue at a nice robust pace consistent, I…

I’d be conservative on that. I mean, I think typically you will likely see that many companies when they do get their trials up and running. But our plans and as we’re building on our business, we’re just assuming that it’s going to be modest growth other than what we’re seeing from the Estech side of things, modest to very low growth on the what was the AtriCure products and adding on the Estech products on top of that should see some top line growth. But I’d say my answer is pretty consistent on that. This year, in 2014, there won’t be much, just because the trial we’re going to submit here, hopefully very soon. Once we get that submitted we’ll have time to go back and forth with the FDA with the goal of getting approved by the end of the year, and really being in trial sometime next year. Could there be an up tick relative to that? There absolutely could be, but I’m all conservative to bank on it. Jason Mills – Canaccord Genuity: Okay. How much of you, because you think the question I wanted to ask is important. There is another company, that CEO joined your board is long term growth prospects and our view are quiet good, their sales force added, they caused some disruptions in one of his businesses and I know you don’t want to talking about. But just wanted to ask you specifically as you look out over the next 12 months and then you’re adding sales and marketing and doing internal training. If you could foresee or should we be aware of any period of time where your reps maybe training your new reps or training sessions maybe heavy, that we should be aware of?

No, I’d say that the biggest disruption really was in the first quarter for us. We put two different organizations together, did new training and net new products. So this is a really heavy quarter for that type of training force in the U.S. market, which is why long term we feel really good about it. And we’re not adding as many as others are adding from that standpoint. We’re growing, I think we’re about 42 direct reps today, and we’ll probably, as we’ve talked before between 42 direct reps and 45 direct reps or so by the end of the year, so we’re not adding as many right now in terms of territories. Jason Mills – Canaccord Genuity: Thanks Mike.

Thank you. And your next question is of Danielle Antalffy. Your line is open. Please go ahead. Danielle Antalffy – Leerink Partners: Hi, good afternoon guys. Congrats on a great quarter. I had a clinical question and then a sales question for the quarter. So on the clinical side of things with the stroke trial, will you move on to a broader trial once you see safety data or do we have to wait for the six months follow up, so that we see some efficacy data as well before you pursue a broader or more broad based trial?

We’re going to have to see some safety data, but it depends on really the FDA. If we’re starting to see that we’re in parallel conversation to them, so we’d love to accelerate it and show them the data from quite frankly the deep feasibility trial where we did a Clip on every one of the patients and the fact we’ve got a lot of these out there already that have been deployed safely. I mean, so we’re trying to leverage that in our conversations, but we’re not going to bank on it at this point. We’re going to try to get this trial up and running, get these 30 patients and hopefully they’ll feel comfortable, if that’s earlier, so we’re doing a farewell path. Danielle Antalffy – Leerink Partners: Okay, great. And then a question on any potential sales synergies in the quarter. Estech did have a few accounts, I think that you guys were not in. Have you guys been able to penetrate those accounts and how much are you seeing from a sales synergy perspective, on both sides of the equation?

I’d say it’s to be told on their accounts, because as you might expect near the end of an acquisition at the end of last year their accounts had all sorts of different items that we’re kind of going in and out and there was a continuous sales force at the end because we announced it before the end of the year. I’d say that we’re starting to get some synergies in their accounts, starting a build relationships, but I wouldn’t say that there’s a lot of synergy and bring our net new products into their sites yet, because we’ve got to build trust into a new site, but we had to know those or have those relationships before. And so that’s going to take a little bit of time. I think the synergies on that front will really come near the end of the year and then into next year. We’re seeing – now we all guys have good relationships in our accounts. We’re starting to bring in some of the Estech products and we’re starting to see them being used and we’re definitely starting to see some synergy on that front in the U.S. market. On the OUS side, it’s a little more synergy that we’re definitely seeing in terms of the teams working really well together, again because the bolt-on made that a little bit easier from that standpoint. Danielle Antalffy – Leerink Partners: Okay, perfect. Thanks guys.

Thanks.

Thank you. I would now like to turn the call over to Mike Carrel for closing remarks. Please go ahead.

Well everyone, thank you very much for joining us today and participating in the call and your interest in AtriCure. Have a great evening. Talk to you soon.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Thank you.