Conference Call Scheduled for Today,
February 3, 2021, at 3:30 PM CT (4:30 PM ET)
- Revenues of $64.2 million increased 6% sequentially compared
to first quarter
- Net loss was $0.1 million, or $0.00 per basic and diluted
share
- Management provides fiscal 2021 third quarter revenue
guidance of $60 million to $65 million
- Receives CE Mark for Diamondback 360® Coronary Orbital
Atherectomy System
- Sachin H. Jain, MD, MBA, joins Board of Directors
- Announces partnership to develop new drug-coated balloon
technology
Cardiovascular Systems, Inc. (CSI®) (NASDAQ: CSII), a medical
device company developing and commercializing innovative
interventional treatment systems for patients with peripheral and
coronary artery disease, today reported financial results for its
fiscal second quarter, ended December 31, 2020.
Executive Commentary – Scott Ward, Chairman, President and
CEO
“Today we reported second quarter revenues of $64.2 million,
representing a sequential quarterly improvement of 6%. The surge in
new COVID cases and increased ICU demand began negatively impacting
our procedures during the final weeks of December and as a result
our revenue finished slightly below the midpoint of our guidance
range.
“Considering the unprecedented spike in hospital admissions, we
are really pleased with these results and proud of our team’s
focused support of our customers and patients under these extreme
conditions.
“We expect that our Q3 revenue of $60 to $65 million may be
slightly down sequentially, but essentially in line with last year.
Even though the pandemic will negatively impact our sales in Q3, we
are optimistic about calendar 2021 and we expect our business to
ramp sequentially throughout the year as the pandemic subsides and
we leverage advancements in our core product offering, drive higher
revenue per procedure and resume our international expansion
plans.”
Q2 Financial Highlights
CSI’s fiscal 2021 second-quarter revenues were $64.2 million,
representing a sequential increase of $3.6 million, or 6.0%, from
first quarter. Year-over-year, second-quarter revenues decreased
$4.2 million, or 6.1%. Gross profit margin was 78.3%.
Selling, general and administrative expenses decreased 14.5% to
$40.1 million. Research and development expenses decreased 11% to
$9.6 million due to lower enrollment in the ECLIPSE clinical trial
as a result of COVID-19.
Second-quarter net loss of $0.1 million, or $0.00 per basic and
diluted share, compared favorably to net loss of $3.4 million, or
$0.10 per basic and diluted share, in the prior-year period.
Adjusted EBITDA totaled $5.2 million.
As of December 31, 2020, CSI had cash and marketable securities
totaling $225.1 million and no long-term borrowings.
Fiscal 2021 Third Quarter Guidance
For the fiscal 2021 third quarter ending March 31, 2021, CSI
anticipates:
- Revenue of $60 million to $65 million, representing 98% to 106%
of third quarter of fiscal 2020;
- Gross profit as a percentage of revenues in the 77% to 78%
range;
- Operating expenses in a range of $52 to $54 million;
- Net loss in a range of $3.5 to $6.0 million; and
- Near neutral Adjusted EBITDA
Conference Call Scheduled for Today at 3:30 p.m. CT (4:30
p.m. ET)
CSI will host a live conference call and webcast of its fiscal
second-quarter results today, February 3, 2021, at 3:30 p.m. CT
(4:30 p.m. ET). To participate in the conference call, please
register online. To access the live webcast, register here. A
webcast replay will be available beginning at 6:30 p.m. CT the same
day.
CE Mark for Diamondback 360® Coronary Orbital
Atherectomy System
As previously announced on January 18, 2021, CSI has received
the CE Mark for its Diamondback 360® Coronary Orbital Atherectomy
System (OAS) and ViperWire Advance® Coronary Guide Wire with Flex
Tip (ViperWire Advance with Flex Tip).
Sachin H. Jain, MD, MBA, named to CSI Board of
Directors
As previously announced on January 27, 2021, Sachin H. Jain, MD,
MBA., currently the President and Chief Executive Officer of SCAN
Group and Health Plan, a mission-driven organization dedicated to
the health and wellness of older adults, was added as an
independent member of the Board of Directors.
Partnership to develop new drug-coated balloon
technology
As previously announced on February 1, 2021, CSI has partnered
with Chansu Vascular Technologies, LLC (CVT) to develop novel
peripheral and coronary everolimus drug-coated balloons (DCBs).
This partnership brings together CSI’s leadership in the treatment
of calcified arterial lesions with Dr. Philippe Marco, a pioneer in
the successful development of several drug-coated devices.
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 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 system treats calcified and
fibrotic plaque in arterial vessels throughout the leg and heart
and addresses many of the limitations associated with existing
surgical, catheter and pharmacological treatment alternatives. For
additional information, please visit www.csi360.com and connect on
Twitter @csi360.
Safe Harbor
Certain 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) CSI’s
strategy and goals; (ii) management of CSI’s business during the
pandemic and the ongoing impact of the pandemic; (iii) our
expectations that our business will ramp sequentially throughout
calendar 2021 as the pandemic subsides and we leverage advancements
in our core product offering, drive higher revenue per procedure
and resume our international expansion plans; (iv) anticipated
revenue, gross profit, operating expenses, net loss and Adjusted
EBITDA; and (v) the development of new DCBs, are forward-looking
statements. These statements involve risks and uncertainties that
could cause results to differ materially from those projected,
including, but not limited to, the ongoing COVID-19 pandemic and
the impact and scope thereof on CSI, our distribution partners, the
supply chain and physicians and facilities, including government
actions related to the COVID-19 outbreak, material delays and
cancellations of procedures, delayed spending by healthcare
providers, and distributor and supply chain disruptions; regulatory
developments, clearances and approvals; approval of our products
for distribution in countries outside of the United States;
approval of products for reimbursement and the level of
reimbursement in the U.S., Japan and other foreign countries;
dependence on market growth; agreements with third parties to sell
their products; the ability of us and our distribution partners to
successfully launch CSI products outside of the United States and
Japan; our ability to maintain third-party supplier relationships
and renew existing purchase agreements; our ability to maintain our
relationship with our distribution partner in Japan and with
OrbusNeich; the experience of physicians regarding the
effectiveness and reliability of the products we sell; 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, including the timing of
product development programs; 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;
court rulings and future actions by the FDA and other regulatory
bodies; the effects of hurricanes, flooding, and other natural
disasters on our business; the impact of federal corporate tax
reform on our business, operations and financial statements;
international trade developments; shutdowns of the U.S. federal
government; general economic conditions; unanticipated developments
during the manufacturing transfer process for the WIRION system;
the effectiveness of the WIRION system; the potential impact of any
future strategic transactions; the ability of CSI and CVT to
collaborate on the development of new DCBs; the ability of CVT to
meet development milestones; satisfaction of the conditions to
CSI’s additional financing obligations; satisfaction of milestones
and conditions to CSI’s rights and obligations to acquire CVT; 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 Products
Indications: The Stealth 360® PAD System and Diamondback
360® PAD System are percutaneous orbital atherectomy systems (OAS)
indicated for use as therapy in patients with occlusive
atherosclerotic disease in peripheral arteries and stenotic
material from artificial arteriovenous dialysis fistulae.
Contraindications: The OAS are contraindicated for use in
coronary arteries, bypass grafts, stents or where thrombus or
dissections are present.
Warnings/Precautions: 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.
See the instructions for use 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 these devices to
sale by or on the order of a physician.
The Stealth 360® PAD System and Diamondback 360® PAD System
received FDA 510(k) clearance. The Stealth 360® PAD System is CE
Marked.
Coronary Product
Indications: 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 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 these devices to
sale by or on the order of a physician.
The Diamondback 360® Coronary OAS is FDA PMA approved.
Cardiovascular Systems,
Inc.
Consolidated Statements of
Operations
(Dollars in Thousands)
(unaudited)
Three Months Ended
Six Months Ended
December 31
December 31
2020
2019
2020
2019
Net revenues
$
64,169
$
68,334
$
124,713
$
132,824
Cost of goods sold
13,920
13,718
26,484
26,390
Gross profit
50,249
54,616
98,229
106,434
Expenses:
Selling, general and
administrative
40,061
46,867
80,343
93,619
Research and development
9,601
10,786
18,653
21,551
Amortization of intangible
assets
304
337
608
571
Total expenses
49,966
57,990
99,604
115,741
Income (loss) from operations
283
(3,374
)
(1,375
)
(9,307
)
Other (income) and expense,
net
276
(17
)
631
(208
)
Income (loss) before income
taxes
7
(3,357
)
(2,006
)
(9,099
)
Provision for income taxes
63
44
126
82
Net loss
$
(56
)
$
(3,401
)
$
(2,132
)
$
(9,181
)
Basic and diluted earnings per
share
$
—
$
(0.10
)
$
(0.06
)
$
(0.27
)
Basic and diluted weighted
average shares outstanding
38,808,980
34,069,412
38,746,410
33,969,818
Cardiovascular Systems,
Inc.
Consolidated Balance
Sheets
(Dollars in Thousands)
(unaudited)
December 31,
June 30,
2020
2020
ASSETS
Current assets
Cash and cash equivalents
$
73,783
$
185,463
Marketable securities
151,272
46,691
Accounts receivable, net
32,526
25,212
Inventories
32,506
27,706
Prepaid expenses and other
current assets
2,994
2,617
Total current assets
293,081
287,689
Property and equipment, net
28,123
27,810
Intangible assets, net
15,998
16,606
Other assets
11,734
7,414
Total assets
$
348,936
$
339,519
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
13,669
$
11,539
Accrued expenses
32,338
31,100
Deferred revenue
2,078
1,867
Total current liabilities
48,085
44,506
Long-term liabilities
Financing obligation
20,716
20,818
Deferred revenue
3,644
4,707
Other liabilities
2,659
696
Total liabilities
75,104
70,727
Commitments and contingencies
—
—
Total stockholders’ equity
273,832
268,792
Total liabilities and
stockholders’ equity
$
348,936
$
339,519
Non-GAAP Financial Measures
To 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 this non-GAAP measure to the most comparable
U.S. GAAP measure for the respective periods can be found in the
following tables. In addition, an explanation of the manner in
which CSI's management uses this measure to conduct and evaluate
its business, the economic substance behind management's decision
to use this measure, the substantive reasons why management
believes that this measure provides useful information to
investors, the material limitations associated with the use of this
measure and the manner in which management compensates for those
limitations is included following the reconciliation table.
Adjusted EBITDA
(Dollars in Thousands)
(unaudited)
Three Months Ended
Six Months Ended
December 31
December 31
2020
2019
2020
2019
Net loss
$
(56
)
$
(3,401
)
$
(2,132
)
$
(9,181
)
Less: Other (income) and expense,
net
276
(17
)
631
(208
)
Less: Provision for income
taxes
63
44
126
82
Income (loss) from operations
283
(3,374
)
(1,375
)
(9,307
)
Add: Stock-based compensation
3,877
3,290
8,784
7,196
Add: Depreciation and
amortization
1,058
1,090
2,087
2,064
Adjusted EBITDA
$
5,218
$
1,006
$
9,496
$
(47
)
Use and Economic Substance of Non-GAAP Financial Measures
Used by CSI and Usefulness of Such Non-GAAP Financial Measures to
Investors
CSI 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 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
Limitations
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. 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 provides 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: https://www.businesswire.com/news/home/20210203005890/en/
Cardiovascular Systems, Inc. Jack Nielsen (651) 202-4919
j.nielsen@csi360.com
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