Conference Call Scheduled for Today, October
26, 2016, at 3:45 PM CT (4:45 PM ET)
- Revenues of $49.8 million grew 14%
compared to first quarter last year
- Peripheral revenue resumed
year-over-year growth, increasing 9% to $38.2 million
- Coronary revenue grew 33% to $11.6
million
- Net loss improved $11.4 million to
$(1.9) million
- Adjusted EBITDA was positive at $2.6
million
- Cash decline of $2.4 million
included a $3.0 million payment to the Department of
Justice
- LIBERTY 360° Study 30-day results
demonstrated high rates of freedom from Major Adverse Events (MAE)
and procedural success, as well as quality of life improvements,
across all Rutherford classes
Cardiovascular Systems, Inc. (CSI) (NASDAQ: CSII), a medical
device company developing and commercializing innovative
interventional treatment systems for peripheral and coronary artery
disease, today reported financial results for its fiscal first
quarter ended September 30, 2016.
The company’s first-quarter revenues were $49.8 million, a 14%
increase from the first quarter of fiscal 2016. Coronary revenues
grew 33% over last year, while peripheral revenue resumed
year-over-year growth, increasing 9%.
The first-quarter gross profit margin increased to 81.0% from
80.0% in the prior-year period, driven by unit cost reductions and
higher average selling prices. Operating expenses in the first
quarter were 13% lower than the prior year, primarily reflecting
management’s cost realignment initiatives and the timing of
projects.
Net loss improved $11.4 million year over year, to a loss of
$(1.9) million, or $(0.06) per share, compared to a net loss of
$(13.3) million, or $(0.41) per share in the prior year period.
Adjusted EBITDA was positive in the quarter at $2.6 million. Cash
declined only $2.4 million for the quarter, including a $3.0
million initial payment for the company’s settlement with the
Department of Justice.
Scott Ward, CSI’s Chairman, President and Chief Executive
Officer, said, “Our top- and bottom-line results mark the third
consecutive quarter of financial improvement, demonstrating
significant progress toward our goal of driving attractive revenue
growth, while moving toward positive cash flow and
profitability.”
LIBERTY 360° StudyIn August, Dr. George Adams, director
of Cardiovascular and Peripheral Vascular Research at Rex Hospital
in Raleigh, N.C., presented the 30-day results from the LIBERTY
360° study in a late-breaking presentation at the 2016 Amputation
Prevention Symposium (AMP) in Chicago. LIBERTY 360° was a 1,200
patient, all-comers study in which physicians could use any
FDA-approved endovascular device to treat patients. CSI’s Orbital
Atherectomy System was used to treat nearly half of all lesions in
the study, including over 60% of the lesions in the 100 patients
with Rutherford 6 classification.
LIBERTY 360° 30-day results demonstrated high rates of
procedural lesion treatment success and freedom from MAE, as well
as quality of life improvements, across all Rutherford classes
including challenging Rutherford 6 patients.
“The results from the LIBERTY 360° study will provide us with
valuable information about the clinical and economic outcomes of
atherectomy in PAD patients,” said Dr. Adams, who served as one of
the national principal investigators (PI) for the study. “This is
the first device study to specifically include patients across all
Rutherford classes, particularly the most severe form of PAD,
Rutherford class 6. We saw a freedom from MAE rate of 90.7% for
Rutherford class 6 patients at 30 days.”
Dr. Jihad Mustapha, Director of Cardiovascular Catheterization
Laboratories, Metro Health Hospital, Wyoming, Mich., an additional
national PI for LIBERTY 360° and author on the AMP abstract, said,
“Procedural complications rarely resulted in post-procedural
hospitalization in all Rutherford classes and, impressively, 78% of
Rutherford class 6 subjects were discharged to their homes.” He
concluded, “Early findings in this novel, all-comers PAD study
suggest that ‘watchful waiting’ in Rutherford class 2-3 and
‘primary amputation’ in Rutherford class 6 may not be necessary.
Percutaneous vascular interventions can be successful in these
patient populations as well.”
Fiscal 2017 Second-Quarter OutlookWard said, “In the
second quarter, we expect to demonstrate continued progress on our
goal to provide attractive year-over-year revenue growth, while
improving bottom-line and cash flow performance. Revenue is
expected to grow 18% to 21% over prior year, with dramatic
improvements from prior-year losses and cash flow.”
For the fiscal 2017 second quarter ending December 31, 2016, CSI
anticipates:
- Revenue in a range of $49.0 million to
$50.0 million;
- Gross profit as a percentage of
revenues similar to the first quarter of fiscal 2017;
- Operating expenses similar to the first
quarter of fiscal 2017;
- Net loss in the range of $(1.7) million
to $(2.3) million, or loss per common share ranging from $(0.05) to
$(0.07), assuming approximately 33.0 million average shares
outstanding; and
- Positive Adjusted EBITDA.
Conference Call Today at 3:45 p.m. CT (4:45 p.m.
ET)Cardiovascular Systems, Inc. will host a live conference
call and webcast of its fiscal first-quarter results today, October
26, 2016, at 3:45 p.m. CT (4:45 p.m. ET). To access the call, dial
(877) 201-0168 and enter the access number 93470708. Please dial in
at least 10 minutes prior to the call. To listen to the live
webcast, go to the investor section of the company’s website,
www.csi360.com, and click on the
webcast icon.
For an audio replay of the conference call, dial (855) 859-2056
and enter 93470708. The audio replay will be available beginning at
6:45 p.m. CT on Wednesday, October 26, 2016, through 10:59 p.m. CT
on Wednesday, November 2, 2016.
Use of Non-GAAP Financial MeasuresTo supplement CSI's
consolidated condensed financial statements prepared in accordance
with U.S. generally accepted accounting principles (GAAP), CSI uses
certain non-GAAP financial measures in this release.
Reconciliations of the non-GAAP financial measures used in this
release to the most comparable U.S. GAAP measures for the
respective periods can be found in tables later in this release
immediately following the consolidated statements of operations.
Non-GAAP financial measures have limitations as analytical tools
and should not be considered in isolation or as a substitute for
CSI's financial results prepared in accordance with GAAP.
About Liberty 360The LIBERTY 360° study is a prospective,
observational, multi-center study evaluating the clinical and
economic outcomes of endovascular interventions in patients with
symptomatic peripheral artery disease (PAD), including critical
limb ischemia (CLI), the most severe form of PAD. The study
includes all commercially available technologies, including CSI’s
Diamondback 360® Peripheral Orbital Atherectomy System, to treat
PAD and CLI. The company completed enrollment of 1,204 patients
across 51 sites in the United States in February 2016.
The LIBERTY 360° study includes patients with various levels of
PAD ranked on the Rutherford classification scale, including
Rutherford 6, those with the most severe form of PAD. Included in
the analysis are 500 Rutherford class 2-3 patients, 589 Rutherford
class 4-5 patients and 100 Rutherford class 6 patients. More
information about the study design is available at
www.ClinicalTrials.gov; identifier: NCT01855412.
About Peripheral Artery Disease (PAD)As many as 18
million Americans, most over age 65, suffer from PAD, which is
caused by the accumulation of plaque in peripheral arteries
(commonly the pelvis or leg) reducing blood flow. Symptoms include
leg pain when walking or at rest. Left untreated, PAD can lead to
severe pain, immobility, non-healing wounds and eventually limb
amputation. With risk factors such as diabetes and obesity on the
rise, the prevalence of PAD is growing at double-digit rates.
Millions of patients with PAD may benefit from treatment with
orbital atherectomy utilizing the Stealth 360® and Diamondback 360
Peripheral Orbital Atherectomy Systems, minimally invasive catheter
systems developed and manufactured by CSI. These systems use a
diamond-coated crown, attached to an orbiting shaft, which sands
away plaque while preserving healthy vessel tissue — a critical
factor in preventing reoccurrences. Balloon angioplasty and stents
have significant shortcomings in treating hard, calcified lesions.
Stents are prone to fractures and high recurrence rates, and
treatment of hard, calcified lesions often leads to vessel damage
and suboptimal results.
About Coronary Artery Disease (CAD)CAD is a
life-threatening condition and a leading cause of death in men and
women in the United States. CAD occurs when a fatty material called
plaque builds up on the walls of arteries that supply blood to the
heart. The plaque buildup causes the arteries to harden and narrow
(atherosclerosis), reducing blood flow. The risk of CAD increases
if a person has one or more of the following: high blood pressure,
abnormal cholesterol levels, diabetes, or family history of early
heart disease. According to the American Heart Association, 16.3
million people in the United States have been diagnosed with CAD,
the most common form of heart disease. Heart disease claims more
than 600,000 lives in the United States each year. According to
estimates, significant arterial calcium is present in nearly 40% of
patients undergoing a percutaneous coronary intervention (PCI).
Significant calcium contributes to poor outcomes and higher
treatment costs in coronary interventions when traditional
therapies are used, including a significantly higher occurrence of
death and major adverse cardiac events (MACE).
About Cardiovascular Systems, Inc.Cardiovascular Systems,
Inc., based in St. Paul, Minn., is a medical device company focused
on developing and commercializing innovative solutions for treating
vascular and coronary disease. The company’s Orbital Atherectomy
Systems treat calcified and fibrotic plaque in arterial vessels
throughout the leg and heart in a few minutes of treatment time,
and address many of the limitations associated with existing
surgical, catheter and pharmacological treatment alternatives. The
U.S. FDA granted 510(k) clearance for the use of the Diamondback
Orbital Atherectomy System in peripheral arteries in August 2007.
In October 2013, the company received FDA approval for the use of
the Diamondback Orbital Atherectomy System in coronary arteries.
The Stealth 360® Peripheral Orbital Atherectomy System (OAS)
received CE Mark in October 2014. To date, over 275,000 of CSI’s
devices have been sold to leading institutions across the United
States. For more information, visit the company’s website at
www.csi360.com.
Safe HarborCertain statements in this news release are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and are provided under the
protection of the safe harbor for forward-looking statements
provided by that Act. For example, statements in this press release
regarding (i) future revenue growth, cash flow and profitability;
(ii) the LIBERTY study, including results of the study; and (iii)
anticipated revenue, gross profit, operating expenses, net loss and
Adjusted EBITDA. These statements involve risks and uncertainties
that could cause results to differ materially from those projected,
including, but not limited to, regulatory developments in the U.S.
and foreign countries; FDA and similar foreign clearances and
approvals; approval of our products for distribution in foreign
countries; approval of products for reimbursement and the level of
reimbursement; dependence on market growth; agreements with third
parties to sell their products; our ability to negotiate and agree
upon definitive documentation with a distribution partner in Japan;
the experience of physicians regarding the effectiveness and
reliability of CSI’s products; the reluctance of physicians,
hospitals and other organizations to accept new products; the
potential for unanticipated delays in enrolling medical centers and
patients for clinical trials; actual clinical trial and study
results; the impact of competitive products and pricing;
unanticipated developments affecting our estimates regarding
expenses, future revenues and capital requirements; the difficulty
of successfully managing operating costs; our ability to manage our
sales force strategy; our actual research and development efforts
and needs; our ability to obtain and maintain intellectual property
protection for product candidates; our actual financial resources
and our ability to obtain additional financing; fluctuations in
results and expenses based on new product introductions, sales mix,
unanticipated warranty claims, and the timing of project
expenditures; our ability to manage costs; investigations or
litigation threatened or initiated against us; and general economic
conditions; and other factors detailed from time to time in CSI’s
SEC reports, including its most recent annual report on Form 10-K
and subsequent quarterly reports on Form 10-Q. CSI encourages you
to consider all of these risks, uncertainties and other factors
carefully in evaluating the forward-looking statements contained in
this release. As a result of these matters, changes in facts,
assumptions not being realized or other circumstances, CSI's actual
results may differ materially from the expected results discussed
in the forward-looking statements contained in this release. The
forward-looking statements made in this release are made only as of
the date of this release, and CSI undertakes no obligation to
update them to reflect subsequent events or circumstances.
Product Disclosures:
Peripheral ProductsThe Stealth 360® PAD System and
Diamondback 360® PAD System are percutaneous orbital atherectomy
systems indicated for use as therapy in patients with occlusive
atherosclerotic disease in peripheral arteries and stenotic
material from artificial arteriovenous dialysis fistulae. The
systems are contraindicated for use in coronary arteries, bypass
grafts, stents or where thrombus or dissections are present.
Although the incidence of adverse events is rare, potential events
that can occur with atherectomy include: pain, hypotension,
CVA/TIA, death, dissection, perforation, distal embolization,
thrombus formation, hematuria, abrupt or acute vessel closure, or
arterial spasm.
Coronary ProductIndications: The Diamondback 360®
Coronary Orbital Atherectomy System (OAS) is a percutaneous orbital
atherectomy system indicated to facilitate stent delivery in
patients with coronary artery disease (CAD) who are acceptable
candidates for PTCA or stenting due to de novo, severely calcified
coronary artery lesions.
Contraindications: The OAS is contraindicated when the
ViperWire guide wire cannot pass across the coronary lesion or the
target lesion is within a bypass graft or stent. The OAS is
contraindicated when the patient is not an appropriate candidate
for bypass surgery, angioplasty, or atherectomy therapy, or has
angiographic evidence of thrombus, or has only one open vessel, or
has angiographic evidence of significant dissection at the
treatment site and for women who are pregnant or children.
Warnings/Precautions: Performing treatment in excessively
tortuous vessels or bifurcations may result in vessel damage; The
OAS was only evaluated in severely calcified lesions, A temporary
pacing lead may be necessary when treating lesions in the right
coronary and circumflex arteries; On-site surgical back-up should
be included as a clinical consideration; Use in patients with an
ejection fraction (EF) of less than 25% has not been evaluated. See
the instructions for use before performing Diamondback 360 Coronary
OAS procedures for detailed information regarding the procedure,
indications, contraindications, warnings, precautions, and
potential adverse events. For further information call CSI at
1-877-274-0901 and/or consult CSI’s website at www.csi360.com.
Caution: Federal law (USA) restricts this device to sale
by or on the order of a physician.
Micro Crown OASCSI has commenced its COAST
Investigational Device Exemption clinical trial to evaluate the
safety and effectiveness of its new micro crown orbital technology
in treating coronary arteries. This new system is limited by
federal law to investigational use and is currently not
commercially available in the United States or Japan.
Cardiovascular Systems, Inc. Consolidated
Statements of Operations (Dollars in Thousands)
(unaudited) Three Months Ended
September 30, 2016 2015
Net revenues $ 49,800 $ 43,871 Cost of goods sold 9,466
8,771 Gross profit 40,334 35,100 Expenses:
Selling, general and administrative 36,866 41,395 Research and
development 5,335 6,941 Total expenses
42,201 48,336 Loss from operations
(1,867 ) (13,236 ) Other (income) and expense, net (33 )
2 Loss before income taxes (1,834 ) (13,238 )
Provision for income taxes 24 23 Net
loss $ (1,858 ) $ (13,261 ) Net loss per common share: Basic
and diluted $ (0.06 ) $ (0.41 ) Weighted average common
shares used in computation: Basic and diluted 32,985,081
32,210,874
Cardiovascular
Systems, Inc. Consolidated Balance Sheets (Dollars in
Thousands) (unaudited)
September 30, June 30, 2016 2016
ASSETS Current assets Cash and cash equivalents $ 58,194 $
60,638 Accounts receivable, net 24,308 23,128 Inventories 16,887
17,440 Marketable securities 704 684 Prepaid expenses and other
current assets 1,999 2,992 Total current assets
102,092 104,882 Property and equipment, net 31,820 32,471 Patents,
net 4,352 5,013 Other assets 70 40 Total assets $
138,334 $ 142,406
LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities Accounts payable $ 8,764 $ 8,506
Accrued expenses 21,341 26,993 Total current
liabilities 30,105 35,499 Long-term liabilities Other liabilities
5,285 6,010 Total liabilities 35,390 41,509
Commitments and contingencies Total stockholders' equity
102,944 100,897 Total liabilities and stockholders' equity $
138,334 $ 142,406
Cardiovascular Systems, Inc.
Supplemental Sales Information (Dollars in Thousands)
(unaudited) Three Months Ended
September 30, 2016 2015
Device revenue $ 45,851 $ 40,575 Other product revenue 3,949
3,296 Total revenue $ 49,800 $ 43,871
PAD revenue $ 38,214 $ 35,180 CAD revenue
11,586 8,691 Total revenue $ 49,800 $
43,871 New customers: PAD 40 50 CAD 52 47
Reorder revenue % 98 % 97 %
Non-GAAP Financial MeasuresTo supplement CSI's
consolidated condensed financial statements prepared in accordance
with GAAP, CSI uses a non-GAAP financial measure referred to as
"Adjusted EBITDA" in this release.
Reconciliations of Adjusted EBITDA to the most comparable U.S.
GAAP measure for the respective periods can be found in the table
on the next page. In addition, an explanation of the manner in
which CSI's management uses Adjusted EBITDA to conduct and evaluate
its business, the economic substance behind management's decision
to use Adjusted EBITDA, the substantive reasons why management
believes that Adjusted EBITDA provides useful information to
investors, the material limitations associated with the use of
Adjusted EBITDA and the manner in which management compensates for
those limitations is included following the reconciliation
table.
Cardiovascular Systems, Inc. Adjusted EBITDA
(Dollars in Thousands) (unaudited)
Three Months Ended September 30, 2016
2015 Net loss $ (1,858 ) $ (13,261 ) Less:
Other (income) and expense, net (33 ) 2 Less: Provision for income
taxes 24 23 Loss from operations (1,867
) (13,236 ) Add: Stock-based compensation 3,450 4,107 Add:
Depreciation and amortization 1,017 940
Adjusted EBITDA $ 2,600 $ (8,189 )
Use and Economic Substance of Non-GAAP Financial Measures
Used by CSI and Usefulness of Such Non-GAAP Financial Measures to
InvestorsCSI uses Adjusted EBITDA as a supplemental measure of
performance and believes this measure facilitates operating
performance comparisons from period to period and company to
company by factoring out potential differences caused by
depreciation and amortization expense and non-cash charges such as
stock based compensation. CSI's management uses Adjusted EBITDA to
analyze the underlying trends in CSI's business, assess the
performance of CSI's core operations, establish operational goals
and forecasts that are used to allocate resources and evaluate
CSI's performance period over period and in relation to its
competitors' operating results. Additionally, CSI's management is
evaluated on the basis of Adjusted EBITDA when determining
achievement of their incentive compensation performance
targets.
CSI believes that presenting Adjusted EBITDA provides investors
greater transparency to the information used by CSI's management
for its financial and operational decision-making and allows
investors to see CSI's results "through the eyes" of management.
CSI also believes that providing this information better enables
CSI's investors to understand CSI's operating performance and
evaluate the methodology used by CSI's management to evaluate and
measure such performance.
The following is an explanation of each of the items that
management excluded from Adjusted EBITDA and the reasons for
excluding each of these individual items:
-- Stock-based compensation. CSI excludes stock-based
compensation expense from its non-GAAP financial measures primarily
because such expense, while constituting an ongoing and recurring
expense, is not an expense that requires cash settlement. CSI's
management also believes that excluding this item from CSI's
non-GAAP results is useful to investors to understand the
application of stock-based compensation guidance and its impact on
CSI's operational performance, liquidity and its ability to make
additional investments in the company, and it allows for greater
transparency to certain line items in CSI's financial
statements.
-- Depreciation and amortization expense. CSI excludes
depreciation and amortization expense from its non-GAAP financial
measures primarily because such expenses, while constituting
ongoing and recurring expenses, are not expenses that require cash
settlement and are not used by CSI's management to assess the core
profitability of CSI's business operations. CSI's management also
believes that excluding these items from CSI's non-GAAP results is
useful to investors to understand CSI's operational performance,
liquidity and its ability to make additional investments in the
company.
Material Limitations Associated with the Use of Non-GAAP
Financial Measures and Manner in which CSI Compensates for these
LimitationsNon-GAAP financial measures have limitations as
analytical tools and should not be considered in isolation or as a
substitute for CSI's financial results prepared in accordance with
GAAP. Some of the limitations associated with CSI's use of these
non-GAAP financial measures are:
-- Items such as stock-based compensation do not directly affect
CSI's cash flow position; however, such items reflect economic
costs to CSI and are not reflected in CSI's "Adjusted EBITDA" and
therefore these non-GAAP measures do not reflect the full economic
effect of these items.
-- Non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles and therefore
other companies may calculate similarly titled non-GAAP financial
measures differently than CSI, limiting the usefulness of those
measures for comparative purposes.
-- CSI's management exercises judgment in determining which
types of charges or other items should be excluded from the
non-GAAP financial measures CSI uses. CSI compensates for these
limitations by relying primarily upon its GAAP results and using
non-GAAP financial measures only supplementally. CSI provides full
disclosure of each non-GAAP financial measure
-- CSI uses and detailed reconciliations of each non-GAAP
measure to its most directly comparable GAAP measure. CSI
encourages investors to review these reconciliations. CSI qualifies
its use of non-GAAP financial measures with cautionary statements
as set forth above.
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version on businesswire.com: http://www.businesswire.com/news/home/20161026006664/en/
Cardiovascular Systems, Inc.Jack Nielsen,
651-202-4919j.nielsen@csi360.comorPadillaCRTMarian Briggs,
612-455-1742marian.briggs@padillacrt.comorMatt Sullivan,
612-455-1709matt.sullivan@padillacrt.com
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