Ladies and gentlemen, good afternoon and welcome to AtriCure’s Third Quarter 2014 Earnings Conference Call. My name is Ryan, and I’ll be the coordinator for the call today. At this time, all participants are in listen-only mode. And 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 from Westwicke Partners for a few introductory comments.

Thanks Ryan. 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 our website. With that, I’d 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. We are pleased to report strong third quarter results and based on the strength of our year-to-date results. We are raising our guidance for 2014 to a revenue range of $105 million to $106 million reflecting approximately 28% to 29% year-over-year growth. We continue to see a tremendous amount of untapped potential in our markets, and thus our plans remain focused on growth and successfully expanding the Afib market through improved patient outcomes, training and education. We also plan to continue to execute on our clinical trials. We are pleased to have the completed enrollment in the ABLATE Post Approval Study or PAS in the third quarter, another milestone towards delivering data to prove the benefit of our innovative products to patients. And we are also excited to announce the way we received FDA approval for a deep protocol. These developments along with an improved pipeline of products, give us great confidence that we have many years of growth ahead of us. Our future looks bright indeed. Before review our quarterly performance, I want to provide an update on our clinical programs. Our ABLATE Post Approval Study is intended to build additional evidence of the safety efficacy and long-term durability of the Maze IV concomitant treatment for Afib using our proprietary surgical devices to treat non-paroxysmal forms of atrial fibrillation. As of October 3, 2014 the ABLATE PAS enrolled 365 patients at 40 hospitals across the United States. AtriCure expects to release preliminary data from the study in about a year with a complete report expected to be published in three years. I cannot over emphasize. This is a major milestone as we expect the post approval study will provide additional compelling evidence of the benefits of treating Afib…

Thank you, Mike. For the third quarter of 2014, revenue increased 32.4% to $26.7 million. Revenue from product sales in the U.S. was $20.1, an increase of 26.7% from the third quarter of 2013. Revenue from open chest ablation related product sales in the U.S. increased by approximately $1.6 million to $11.3 million and U.S. sales of products used in minimally invasive procedures increased approximately $400,000 to $3.9 million. MIS growth was influenced heavily by the sales of products acquired in our December 2013 acquisition of Estech. U.S. sales of the AtriClip system during the third quarter of 2014 were $4.3 million as compared to $2.7 million for the third quarter of 2013, an increase of 58.1%. International revenue grew 53.4% on a GAAP basis and 53.9% on a constant currency basis, as compared to the third quarter of 2013 to $6.6 million. Valve sales totaled approximately $700,000 worldwide, $575,000 in the U.S. and $125,000 in the international markets. Gross margin for the third quarter of 2014 was 70.8% as compared with 72.9% for the third quarter of 2013. As in previous quarters, the sales of the products acquired in the Estech transaction put some pressure on the overall gross margin. The international sales mix was higher in 2014, which also has a negative impact on gross margin. Additionally, the placement in servicing of the capital 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 13.8% or approximately $2.4 million from $17.3 million for the third quarter of 2013 to $19.7 million for the third quarter of 2014. Research and development expenses, which include clinical and regulatory activities, were $5 million for the third quarter…

Thank you, Andy. AtriCure is well positioned with the right products, pipeline and people to further cement us as the leader in the development of technologies to treat challenging Afib conditions. Our core growth strategy is unchanged and in fact accelerating. We will work to expand the market and capture share by increasing awareness through education and training and driving innovation through clinical and commercial support. We look forward to updating you on our progress during future calls and we’ll now open it up to questions. Thank you.

[Operator Instructions] And our first question comes through from Rick Wise with Stifel. Rick Wise – Stifel: Good afternoon and really another fantastic quarter here. Mike, maybe just to start off talk about a little more about the – the training and the courses, I mean clearly that you are on track for the 15 this year and sounds like I heard you correctly that could double next year. It just makes me want to pay even more careful attention to think about the related impact on sales, maybe just talk a little bit if you could about once doctors are trained, our new centers are trained how long it takes to see an impact on sales and, what kind of rough correlation we should make between course and volume or growth or how to think about that?

I would say, we’re kind of in the – in the second phase of the training. So, if you recall take you back just a moment, we trained over 1500 surgeons on a basic core Maze training course that we are running. And we transported that overseas and I have actually started to do that overseas, we are trained about 400 or so over in Europe as well. And you are seeing some of those results, and we’ve done the analysis on those course which is typically a four hour, well three hour excuse me didactic course, where they are just learning the basics of Afib, if you recall Dr. Cox helped us revamp that entire course. So, that it actually was very, very practical. When you look at revenue pre and post, we see about a 30% increase in our revenue after going through the training course. However, what you are seeing is obviously, we don’t, we wanted certainly population to train on that front. And so in order to continue to grow to get more expansion off of that group, we’ve actually added on these advanced training courses and some of the items that I talked about. So, Phase II was and we’re still doing some of those other Maze course, we just don’t as many, we did about 50 or so this year, just those basic course. The advanced courses typically have anywhere between we’ve had as low as 15 people and as high as 50 people at courses when we were in Las Vegas. And those courses are about, they are actually a day and half, are not quite, but about a day long, but there on evening course where they go through this didactic, they go through a dinner discussion and then in the next…

Sure, couple of things Rick, one you mentioned is Estech. So there were certainly people within the organization that we’re here to help us transition the business that fall out over the period. So that clearly was a drag for this year, other things would include, we’ve done a lot of capital work this year on upgrading things with our icebox product that will slow down through next year. So, those are a couple of examples of things that I see in the next 12 months to help this thing, start to get on the rise to the 75% that we’ve talked about. Over that, beyond that period the new facility will help with many things that we start to look at bringing Estech products in-house. Rick Wise – Stifel: Just one last quick one for you Mike, I’m always asking about it, when I talk to you about M&A or the possibility of you thinking about bringing in other technology in your product line, is that still a priority of, is that a priority and or you just got so much clear run rate here, you probably distracted that way? Thanks.

I mean right now we’re very focused on executing what we’ve got at hand, we’ve got a lot of clear run rate as you mentioned Rick. And so, the team is laser focused on making sure we execute with big markets that we’ve got in front of us. That doesn’t mean that we’re not going to be opportunistic, if we see something that make sense and can be additive to is and so we’re also always considering it in attending shows and doing our competitive diligence on that front. So, we’re not, but we’re really focused mostly on executing this business, because there is so much in front of us just with what we’ve got in the product line we have in front of us today.

Our next question comes to you from Tom Gunderson, with Piper Jaffray. Tom Gunderson – Piper Jaffray: Hi, good afternoon. So, maybe to take on to Rick’s first question on your last acquisition Estech, we’re going to anniversary that in another couple of months. And I’m wondering Mike, separate from the contract and the earn outs and what two sides negotiated at the time. How you view, how it’s going from a revenue contribution standpoint is that meeting your expectations little higher, little lower and based on the tentative sort of soft guidance for next year of 15% growth, should I assume that the Estech’s products would be part of that 15% growth?

There is a first piece in terms of what it’s meeting is, it’s right on our expectations. We’re very happy with the way that it’s come together. We feel really good about it on several fronts, the fusion technologies beginning to really gain some traction in the hands of our team. We’ll start to see some growth coming off of that in the coming year. In terms of the open side of the business their clamp business, we have basically moved that share into our business there is very little clamp business that we sell any more from that. And so for us overall it’s actually gone very well and pretty much as expected. I’m not sure, I completely understand the question about the softness relative to the guidance I mean, – we feel pretty good that our organic rate coming into next year will be 15% including whatever we had from this year. So it will be – there is their number, our number and that’s what there will be one number coming into next year. And we feel good that that’s a good solid number coming into next year. Tom Gunderson – Piper Jaffray: Got it. No, I didn’t mean soft as far as negative and then soft as far as it’s not your definitive guidance yet.

Okay. That’s fair, that’s fair. Tom Gunderson – Piper Jaffray: And then on international, 52%, 53% is pretty growth rate and I’m assuming that you’re harvesting a lot of the investment that you did in training and expansion of education last year on the U.S. side in the past you’ve given us kind of, here is what they did before training, here is when they got trained and here’s what they did three, six and nine months after the training in the U.S. Do you have that in whole U.S. or at least some color on that?

We have not been able to track that data yet whole U.S. partly, because we go through distributors in a lot of the different countries. And so it’s more difficult to track it on a facility-by-facility basis like if that doctor actually holds it. We are beginning to start to look at it on a micro basis in Germany and the Benelux region, because those are really our biggest direct market. I don’t have the data right now, just because we’re starting to analyze it. We’re just starting to get enough information, so on the next call we could give it little bit, but it will be really only focused on those direct countries. With that being said, the European growth is really simple, I mean it’s coming off of years training and education is we believe it’s driving an aspect of that growth for sure. But two is that, if you recall when I first started the infrastructure and it really wasn’t in play and we didn’t have much there. And so under our leadership of Pat Kennedy, who is running it for us today. We’ve really expanded the team and added some great, great talent. And so from that standpoint, we’ve now got a good infrastructure in place there and that’s helping drive some of the commercial gains that we’re seeing there. And then third, is that Estech was strong over in Europe and so they gave us some gains in countries like Italy and Russia where they really complemented us quite a bit and we’re selling in the different parts of the countries. And so that’s really helped us out quite a bit as well. So, it’s a combination of all three of those that have driven that, it’s not just the education I don’t think we’re seeing the fruits of all that labor quite yet in Europe yet. So, I think we’ll start to see some of that in 2015 and 2016. Tom Gunderson – Piper Jaffray: Got it. Thanks. That’s it from me.

Next question is from Danielle Antalffy with Leerink Partners. Danielle Antalffy – Leerink Partners: Hi, good afternoon guys. Thanks so much for taking the question and congrats on another fabulous quarter. I just wonder you have another strong quarter as US ablation growth. And Mike, I was hoping you could just walk us through the different sort of sub segments within that, where you’re seeing the most growth today number one and where you see the most run rate. And so by that I mean, obviously mitral is a big piece of your business, aortic and CABG are two other opportunities. And just trying to get a sense of sort of how penetrated we are within that to better frame the runway ahead?

It’s an excellent question. We’ve actually spent a lot of time over the course of the last three months actually looking at the market opportunity through 2020 to see. And we get, we’re fully penetrated in each one of those areas, how far we penetrated, how many procedures are being done today. If you look at the FTS database and you guys can all get it online, what you’ll see first and foremost is that overall the growth in procedures has gone from in 2011 at the end it was about – just over 17,000 procedures being done, combination of concomitant and MIS procedures. Since we have done our training in the labeling that number in the US, in 2013 just two years later was over 24,000 procedures that’s after many years of basic stagnant growth sitting in the 16,000, 17,000 procedure range. And so you can see the impact of that training and education is having on that. And if you just look at the first quarter of this year, it’s actually on our page to do close to 27,000 this year. And so we feel like the fly wheel starting to spin on all different fronts of that, then we would dug down deep into what on the mitrals, the aortics and the CABGs like you had described. We have made great progress on the mitrals, but we are not merely penetrated to the degree that some people would expect, some people have quoted out numbers of 60 plus percent penetration in the mitral space. We think it’s significantly below that and there is still a lot of opportunity there. For example, we were recently invited to be a part of mitral valve conclave and actually participate in some of the education sessions there, because they know that…

I think – well I hear a little bit of noise there. I’ll turn to speak over there – the noise there. The question I know was about the pathway to profitability and we get that question a lot. And our focus is to remain very close to profitability. We kind of gave, kind of high level guidance that we talked about kind of keeping on the EBITDA run rate stands the Estech numbers coming into next year as that soft guidance as Tom had mentioned. And we think that that’s really a prudent way to continue the investments to be very close that we could turn the corner very quickly to be profitable several years out. So, without giving specific dates or quarters, we’re close enough to profitability to be able to turn it with the kind of growth rate that we’ve got, well also evaluating every year whether or not we’ve got the right level of investments to continue to grow the path that we’re on.

Our next question comes to you from Jason Mills with Canaccord Genuity. Jason Mills – Canaccord Genuity: Thanks. Hi, Mike, hi Andy, congrats on another great quarter in the race. Can you hear me okay?

Hearing good. Jason Mills – Canaccord Genuity: Great. Mike, I want to go back to Danielle’s first question, very good elaboration on some of your opportunities with them in the concomitant space. I wonder if you could take us a little bit deeper into the training specifically for CABG and aortic. We were told by some people that ablation methodology is a little bit more difficult, but once trained perhaps not as difficult as some may say. Just maybe give us an overall assessment of where you are with respect to the training programs for CABG and aortic specifically and giving that the penetration level there are lower than mitral be it, sounds like mitral is little lower than what of us may have expected. It still seems to be even under more under penetrated in those latter two areas and talk about sort of what the growth opportunities are there sort of concomitant, intended to your training initiative?

Sure. What really just the beginning phase, beginning to expand out the aortic and the CABG training, so but you’re correct that what happens is people graduate, think about it like going to graduate school where you’re in high school and you learn some skills that even the basics and you begin to do pulmonary vein isolation and then you kind of go to a college and you begin to do a full Maze procedure on the mitral, because you’ve already you’re on pump and you begin to do it, and then you begin to go to graduate school and you begin to look at the aortic and the CABG and you begin to kind of grow from that. And that’s a good way to kind of progressively go there, you can’t go to graduate school without going through those steps to get there. And we do see that, and that’s why I was saying people get comfortable doing the mitrals, if not a mitral surgeon obviously, they take a little bit of a different path and so we try to individualize it from that standpoint. The case observations are big move towards that, two is that we’re actually working very closely with many of our clinical advisors to put together very simple step-by-step approaches for those surgeons that we can expand that training and go deeper. So that some of those advanced trainings will become very focused on just the aortic and the CABG procedures. I anticipate we’ll rollout some of those more detailed ones mid to late next year and so that we can begin to go after and penetrate that market in the – in many years to come. Hopefully we are going to get some context, so we’re kind of in the early stages of developing it, talking about it and showing cases and see more advanced training kind of coming out on that specific area in the later part of next year. Jason Mills – Canaccord Genuity: That helps. If you look at, if I’m looking at the growth rates and some of the things you’re saying about 2015 as well, and sort of just to post, what you put up this quarter, open ablation in MIS and in clip looking at those growth rates. Is it fair to say that sort of the growth rates organically 15% is sort of where the concomitant, where you’re expecting the concomitant part of your business in the U.S. to grow on a go forward basis, when you have perhaps AtriClip all in growing faster and MIS presume to grow a little bit slower?

That’s a reasonable assumption, yes. Jason Mills – Canaccord Genuity: Okay that’s helpful. And then lastly from me on operating expenses, Andy just from a housekeeping perspective, this level – this quarter’s level excluding the offset should we, grow that in the fourth quarter and then sort of as a run rate in 2015?

I think Jason, we just kind of given you the broad guidance that, we’ll continue to make investments in the sales and marketing and training organization. So, given the teaser we gave you on EBITDA, I mean, I think, hopefully that sort of directionally helps you think about SG&A. Jason Mills – Canaccord Genuity: Okay, thanks guys.

Our next question is from Jose Haresco with JMP Securities. Jose Haresco – JMP Securities: Hey guys good afternoon, congratulations on the quarter.

Thanks Jose. Jose Haresco – JMP Securities: I guess, there’s been a lot of focus obviously on the training sessions, but could you give us a little more color on what you’re seeing and the surgeons and physicians who have gone through training, call at the beginning of this year or in the first half. What are their behavior patterns look like, have you achieved greater penetration in their procedure base and where are they using the device and where would you like them to go in terms of different types of surgeries?

What we’re seeing is that, they are increasing, we see – we continue to see, we just did the new analysis that basically showed, it continues to be about 30% increase from when they went into the training to, where do we look at six months, nine months or 12 months before and you look at the same distance afterwards. It’s about a 30% growth rate overall from a revenue standpoint. So that’s the kind of, that’s the pattern that we continue to see as we analyze that from the U.S. standpoint. What we see when they go back into practices they begin to just get more and more comfortable, they at first begin to start to use more products and particularly doing procedures, and then they use more products, because they start to bring cyro into it and they are using the clip. And so, you combine that in the procedure, we’re starting to get more per procedure and we’re actually getting them to grow in all the procedures that we are doing. Jose Haresco – JMP Securities: Are you seeing any sort of halo effect when those folks come back to their practice, I think you might have touched on this earlier. When it come back to the practice start using it, how should we think about the time between, the time that they go back to their practice are using device and timing you might get a second call from someone else they work with [indiscernible] is being doing this for last few months and you kind of – and you get going on some of these procedures?

I would say we’d see a small halo effect on that, I wouldn’t say that’s a huge broad halo effect. I think what, instead of seeing the practice what you want to seeing is people just in general around their communities and as they go to trade shows and other areas when they start to talk to people. They realize that more and more is getting down and our team quite frankly as continued to grow or in their cases. Our team does a great job of following up with them to make sure that they are trying to pull their partners and others into it. I don’t know that it’s just them talking to them, I think it’s kind of a combination. Jose Haresco – JMP Securities: Okay. And I guess lastly on the competitive front, we know the competitor has been very – kind of resources there any particular changes and how you think about competition for the next 12 to 24 months?

No, I mean we – I think you hit it right, and we continue to see the competition we’ve always see out there. Medtronic on the open concomitants base and then contact in the – on the MIS side. Jose Haresco – JMP Securities: Okay, thank you very much.

Now looks that we have a follow up from Jason Mills, Canaccord Genuity. Jason Mills – Canaccord Genuity: Thanks guys, you didn’t expect to get on this quickly, Mike just a question about what’s going on in general and afibrillation specifically from a reimbursement standpoint, and it seems like CMS is getting a little bit more strict with the respect, how many catheter ablations can be done if you’re continuing to see failures. And I’m wondering in light of the fact that year from now will have hopefully some really strong data out of the PAS study, showing the efficacy of surgical ablation and we know that surgical ablation is done on a lot of these failed catheter ablation patients. I’m wondering what if anything that means to your business from a medium to long-term perspective?

Well there is a lot in that question, so I’ll try to answer it in several different segments. As for reimbursement on the catheter side, I’m not aware of any major changes that are going on, but I think long-term when you look at trends, I think CMS is going to continue to look and they are going to pay for our works. We know that our products work, we know we get good efficacy off of it, and so we think that will long-term benefit us. But I’m not aware of anything in the short term in terms of any kind of major shift in that. But I think as they continue to look at it, we will long-term benefit from that both in terms of the PAS study that you mentioned, which I do think is going to be a very big study when we get the results coming out and hopefully announce them in the early 2016 timeframe. Because, when we do that, we believe that that hopefully will have a positive impact on some of items. But in addition to that, that’s one of the reasons we are doing the hybrid procedure, we know that you get very, very good results with that, and so we’re looking forward to getting going on that trial getting these sites up in running, because we believe the efficacy will be very strong and it’s a very good procedure and hopefully that will, again it will be a long-term influence that’s not one of the short term items. But, again the team I think is going to pay for our works. Jason Mills – Canaccord Genuity: Got you, just two follow ups, it’s my understanding could be wrong, correct me if I’m wrong on that, no longer CMS is going to pay for more than two catheter ablations. And we know that that some patients go for more than that, and so that’s really the thrust to my question? And secondly on the Deep trial, what are your expectations for enrollment, IRB approvals enrollment and sort of the timeline for that trial over the next 18, 24 months?

Sure, I’m not aware of what you’re saying in terms of the two ablations, I know there is always talk about them doing that, I’ve heard that in the UK, I’ve heard that in the U.S. before, but I’ve actually not seen anything concrete to prove that point or heard it. And so, I haven’t heard a credible source quite terrifically come out and actually make that kind of statement. So, from my standpoint, we’re focused without assuming that that doesn’t change. With that being said, when you talk about Deep in terms of the timeline, what we’re looking at is, we’ve got 25 sites that we are approved to go up to, we’ve got many sites identified already, we’ve got about 10 sites that we feel very comfortable that can drive the right kind of volume and the right kind of safety and efficacy with the procedure. These are people that are doing 20 plus procedures a year now. So, they’ve got very, very good experience with it. They understand it and we are just starting to go through the IRB process. Now that process can take anywhere from three to nine months depending on the institution, the nine months are just when they depends on their institutional review board how long it takes to get through that. So, our anticipation is we’ll begin to enroll patients sometime in the early part of 2015 and then it will take us about 2 years to enroll if we assume starting enrollment sometime in the second quarter of next year. Jason Mills – Canaccord Genuity: Helpful, thanks Mike.

Okay. And we have no other questions. So, Mike, I’ll turn it back to you for any closing comments.