AtriCure, Inc. (ATRC): what the price requires
At today's price, AtriCure, Inc. (ATRC) is priced for +5.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/ATRC
Headline
| Field | Value |
|---|---|
| Ticker | ATRC |
| Company | AtriCure, Inc. |
| Current price | $34.76/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | revenue-multiple |
| EV / sales paid | 3.2x |
| Steady-state operating margin assumed | 30.0% |
| Implied growth | 5.0% |
The company earns no operating profit yet; the inversion runs on the revenue multiple and an assumed steady-state margin.
Solve inputs: computed at a 10.9% cost of capital with 4% terminal growth over a 5-year stage, holding a 30% terminal operating margin (75% gross margin x the 40% mature-conversion prior); each 1pp of cost of capital moves the implied revenue growth ~5.1pp.
Reconcile: at the x-ray's 9.3% required return this reads ~-3.2%/yr; the models below use their own rates.
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | -2.56σ |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.66x | 2 | expensive |
| Earnings | 10.83x | 3 | expensive |
| Relative | 0.77x | 3 | justifies |
| Growth | 1.24x | 4 | expensive |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.
Per-Model Detail (n=12)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $30.28 | 1.15x | yes | FCF base $0.1B, growth 15% (input: historical growth), terminal g 4.0%, WACC 9.0%, 6yr projection |
| DCF Exit Multiple | Growth | $33.39 | 1.04x | yes | Exit EV/EBITDA: 197.5x / 199.5x / 201.5x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $45.03 | 0.77x | yes | P/S fallback (negative EPS): Sector P/S 4.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $10.03 | 3.47x | yes | Book value floor: BV/sh $10.03, ROE negative |
| Two-Stage Excess Return | Asset | $9.02 | 3.85x | yes | Book value with convergence: BV/sh $10.03, ROE converges to ke |
| Discounted Future Market Cap | Growth | $26.29 | 1.32x | yes | Rev $0.6B, growth 15% (input: historical growth; tapered), Terminal P/S: 2.5x / 3.1x / 3.7x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | $21.37 | 1.63x | yes | Margin ramp: -1% → 12% over 7yr, rev growth 15% (input: historical growth; tapered) |
| Earnings Power Value | Earnings | $2.19 | 15.87x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.01B × (1−21%) / WACC 9.0% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $4.26 | 8.16x | yes | EBITDA $0.01B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $13.42 | 2.59x | yes | FCF $53.6M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $3.21 | 10.83x | yes | SBC-adj FCF $0.01B (FCF $0.05B − SBC $0.05B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | $0.11 | 316.00x | yes | BV $10.03 × (ROIC 0.1% / WACC 9.0%) (excluded from median) |
| P/Sales Sector | Relative | $45.03 | 0.77x | yes | Revenue $0.55B × sector P/S 4.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $78.2m |
| Interest coverage | -2.0x |
| Share count CAGR (dilution) | 1.9% |
| Burning cash | no |
Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.
Bullet Takeaways
- AtriCure is, in its own filing's words, "the market leader in the surgical treatment of Afib and LAAM", meaning it sells the clips and ablation tools that cardiac surgeons use to treat atrial fibrillation and seal off the left atrial appendage, and it just turned the corner to operating profitability on 14% revenue growth.
- The defining feature is that profitability is new and thin: the company has only just moved from operating losses to a small profit, and stock-based compensation consumes most of its free cash flow, so the bottom line is fragile even as gross margin runs above 77%.
- Watch the clinical-trial readouts: AtriCure completed enrollment in its large LeAAPS trial studying its AtriClip device for stroke prevention in non-afib cardiac-surgery patients, a potential indication expansion that would widen the addressable market well beyond today's base.
Bull Case
The counterintuitive thing about AtriCure is that a company growing revenue 14% with 77% gross margins spent years barely breaking even, and it is only now flipping to profit. That is the bull case in one sentence: the business has been investing through its income statement, funding clinical trials and a salesforce ahead of the revenue, and the operating leverage is finally showing. In the first quarter of 2026, income from operations swung to a small profit of $0.5 million from a $6.0 million loss a year earlier, gross margin expanded 246 basis points to 77.4%, and adjusted operating earnings nearly doubled. When a high-gross-margin medical-device company crosses into profitability while still growing in the mid-teens, each incremental dollar of revenue starts dropping through at a high rate.
The franchise underneath is genuinely strong. AtriCure describes itself in the 10-K as "the market leader in the surgical treatment of Afib and LAAM, and pioneers of the application of Cryo Nerve Block in cardiac, thoracic" surgery, and notes that newer products like the "AtriClip FLEX-Mini device and EnCompass clamp meaningfully contributed to our growth in 2025." Importantly, the filing also states there are "limited competitors in our key markets," which for a device company built on surgeon adoption and clinical evidence is the real moat: surgeons trained on AtriCure's tools and trusting its data do not switch easily. Growth was broad-based in the quarter across appendage management, open ablation, and pain management, with pain management up 27%, so the company is not riding a single product.
The biggest call option is clinical. AtriCure completed enrollment a year early in its LeAAPS trial, a 6,500-patient study of its AtriClip left-atrial-appendage device for preventing ischemic stroke in cardiac-surgery patients who do not have a history of atrial fibrillation. If that data supports an expanded indication, it would extend the use of AtriClip from afib patients to a far larger population of cardiac-surgery patients at elevated stroke risk, materially widening the market. The valuation already reflects a reasonable rather than heroic assumption, and the balance sheet supports the wait: AtriCure holds net cash, with liquid assets well above its modest debt. The bull case is a market-leading, high-margin device franchise just reaching profitability, with a large indication-expansion trial as free optionality on top.
Bear Case
The risk in AtriCure is the medtech version of a cycle: it lives and dies on clinical evidence and the regulatory and reimbursement decisions that follow, and those are lumpy, expensive, and never guaranteed. The entire bull case leans on trials like LeAAPS producing data strong enough to win an expanded indication, but trials can disappoint, regulators can demand more, and payers can decline to reimburse a new use even after approval. The company has been spending heavily for years precisely because building this evidence is costly, which is why profitability arrived so late. A single negative or ambiguous readout would remove the optionality the price is partly paying for and send the company back to grinding out single-product growth.
Profitability, now achieved, is thin enough to reverse. The first-quarter operating profit was just $0.5 million on $141.2 million of revenue, a margin barely above zero, and the trailing operating result is essentially breakeven. More telling, stock-based compensation consumes nearly all of the company's free cash flow: the headline cash generation looks healthier than the economic reality once the cost of paying employees in shares is counted. That means the per-share value depends on a profit base that is both small and partly funded by dilution. The 10-K is candid that competitors, most of them larger and better-resourced, are "introducing products to compete directly with ours" and competing for the same scientific and commercial talent, and that the products themselves carry the "product liabilit"y exposure inherent to surgical devices. A market leader with limited competitors today is exactly the kind of target larger medtech firms move against.
The valuation is reasonable but not cheap, and it requires the margin story to keep building. Because trailing earnings are near zero, the price is best read against sales, at roughly 2.5 times revenue, which implies the business eventually earns an operating margin around 30%, a high bar it has never demonstrated, even as revenue is allowed to grow only modestly. The asset-value and earnings-power methods, run against current near-zero profit, land well below the price, while the relative-multiple and growth methods justify it. That split is the signal: the price is a bet on the margin ramp continuing toward a mature-medtech level. If operating leverage stalls, if a trial disappoints, or if a larger competitor presses into appendage management, the price has the static methods far below it and little support. The bear case is not that AtriCure is a weak company; it is that you are paying a growth-and-margin-expansion multiple for a business that just barely turned profitable and whose biggest upside is an unproven trial result.
Valuation
AtriCure is a margin-ramp story, and the valuation has to be read through that lens because trailing earnings sit right at breakeven. The price is therefore measured against sales, at roughly 2.5 times revenue, and inverting that multiple shows what the market assumes: the business eventually earns an operating margin around 30%, derived from its 77% gross margin and a normal device-company conversion, while revenue is allowed to grow only modestly. The near-term growth pace is within what AtriCure has delivered, so the stretch is not the top line; it is whether the company climbs from a near-zero operating margin today to a mature-medtech margin over time. The framework reads the priced-in assumption as broadly within range, which makes this a reasonable rather than aggressive valuation, conditional on the margin expansion arriving.
The families of method split predictably for a company at the profitability inflection. The asset-value methods, floored at a book value near $10 a share, land below the price because the company has only just stopped losing money. The earnings-power methods, capitalizing current near-zero operating profit, land far below the price, which is mechanical: there is almost no trailing profit to capitalize. The relative-multiple methods, applying a medical-device sector price-to-sales multiple, land above the current price, reading the stock as inexpensive on a revenue basis, and the growth methods reach it. That pattern, relative and growth methods justifying the price while the static earnings lenses say expensive, is the signature of a high-margin grower whose earnings have not yet caught up to its revenue. The right way to weigh it is that the revenue multiple is undemanding for the growth and margin profile, but the earnings-based methods will stay depressed until the operating margin actually ramps.
Solvency is a genuine strength and removes the financing risk that plagues many growth-stage device names. AtriCure holds net cash, with roughly $146 million of liquid assets against about $68 million of gross debt, so it does not depend on raising capital to fund its trials or operations, and free cash flow is positive on a reported basis. The one caveat is that stock-based compensation absorbs most of that free cash flow, so the economic cash generation is thinner than the headline, and the share count is creeping up about 2% a year. The buyer at today's price is underwriting the margin ramp and the trial optionality on a balance sheet that can comfortably wait for both. Published analyst targets sit well above the current price, in the high $40s on average with a strong-buy skew, crediting the indication-expansion potential and the operating-leverage story more than the static methods do.
Catalysts
The first quarter of 2026 marked the operating-profitability inflection. Revenue rose 14.3% to $141.2 million, with US sales up 14.9% and international up 11.5%, gross margin expanding to 77.4%, and income from operations turning to a small profit of $0.5 million from a $6.0 million loss a year earlier, while adjusted operating earnings nearly doubled. Growth was broad-based across appendage management, open ablation, and pain management, the last up 27%, helped by newer products including AtriClip FLEX-Mini, PRO-Mini, and cryoSPHERE MAX. Management raised or reiterated full-year 2026 guidance to roughly $600 million to $610 million of revenue and $80 million to $82 million of adjusted operating earnings, so the coming quarters test whether the operating leverage keeps building.
The clinical pipeline is the larger catalyst. AtriCure completed enrollment, a year ahead of plan, in its LeAAPS trial, a 6,500-patient study of its AtriClip left-atrial-appendage device for ischemic-stroke prevention in cardiac-surgery patients without a history of atrial fibrillation, with the company intending to use the data to support an expanded stroke-prevention indication. A positive readout would widen the addressable population well beyond today's afib base. Analyst sentiment is firmly bullish, with a consensus that skews to strong buy and average price targets well above the current level, reflecting confidence in both the margin ramp and the indication-expansion optionality. The next earnings report, the operating-margin trajectory inside it, and any update on the trial timeline are the events that will confirm or challenge the bet the price is making.
Peer Cohorts (Per Segment, With Filing Citations)
Surgical Ablation & Appendage Management Devices (reported)
- AORT (ARTIVION, INC.)
- (no filing in the citation store)
- PEN (Penumbra, Inc)
- (no filing in the citation store)
- IRTC (iRhythm Holdings, Inc.)
- (no filing in the citation store)
- PRCT (PROCEPT BioRobotics Corporation)
- (no filing in the citation store)
- GKOS (GLAUKOS Corp)
- (no filing in the citation store)
- ATEC (Alphatec Holdings, Inc.)
- (no filing in the citation store)
- AXGN (AXOGEN, INC.)
- (no filing in the citation store)
- TNDM (Tandem Diabetes Care, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
company disclosures, 2026 · Q1 FY2026 results, May 2026 · analyst consensus, MarketBeat / public.com, 2026