Conference Call Scheduled for Today, April
29, 2015, at 3:45 PM CT (4:45 PM ET)
- Revenues grew to $47.0 million, a 35
percent increase over fiscal 2014 third quarter
- Coronary product revenues reached
$7.9 million
- FDA clears new 4 Fr 1.25 Solid
Diamondback 360® Peripheral Orbital Atherectomy
System
- ORBIT II 2-year data presented at
CRT, 1-year economic data to be presented at SCAI 2015
- LIBERTY 360° enrollment tops
800
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 third
quarter ended March 31, 2015.
The company’s third-quarter revenues increased 35 percent to
$47.0 million, from $34.9 million in the third quarter of fiscal
2014. Coronary revenues grew to $7.9 million. Customer reorder
revenues remained strong at 95 percent of total revenue, compared
to 96 percent a year ago. Gross profit margin remained consistent
at 78 percent.
CSI’s fiscal 2015 third-quarter net loss was $(10.7) million, or
$(0.34) per common share, compared to a net loss of $(9.7) million,
or $(0.32) per common share, in the fiscal 2014 third quarter. Net
loss increased from the prior year primarily due to planned
investments, including sales force expansion and coronary product
commercialization. Adjusted EBITDA improved to $(6.0) million
compared to $(6.4) million a year earlier.
In the first nine months of fiscal 2015, revenues increased to
$133.1 million, up 37 percent from the fiscal 2014 nine-month
period. Gross margin increased to 78 percent compared to 77 percent
in the prior-year period, while operating expenses rose 30 percent,
primarily due to the planned investments noted above. Adjusted
EBITDA loss decreased by $(3.7) million to $(11.5) million, while
the net loss decreased to $(24.2) million, or $(0.77) per common
share, compared to $(25.7) million, or $(0.94) per common share, in
fiscal 2014.
David L. Martin, CSI’s President and Chief Executive Officer,
said, “Eleven consecutive quarters of 25 percent or greater revenue
growth shows that physicians are increasingly turning to CSI’s
orbital atherectomy technology as the primary therapy when treating
patients with calcified artery disease. The unique ability of our
peripheral and coronary orbital atherectomy systems to treat
calcium and small vessels is expanding the market for the treatment
of peripheral artery disease, including critical limb ischemia, and
calcified coronary disease. Together, these conditions represent a
potential market opportunity of more than $14.0 billion in the
United States alone.”
FDA Clearance for the New 4 Fr 1.25 Solid Diamondback
360® Peripheral OASIn April, CSI received FDA
clearance for its new 4 French (4 Fr) 1.25 Solid Diamondback 360®
Peripheral Orbital Atherectomy System (OAS) for the treatment of
peripheral artery disease (PAD). CSI’s Diamondback Peripheral 145cm
systems are available in two crown designs, the 1.25mm Solid Crown,
and the 1.25mm Micro Crown. Both devices offer a smaller profile
and a more flexible shaft for improved ease of use.
The use of smaller access sheaths can provide procedural
benefits to patients and physicians from reduced procedure times to
fewer procedural complications from bleeding.
Martin said, “This new clearance further expands our 4 Fr,
low-profile product portfolio, with longer and enhanced devices.
Physicians now have the ability to treat PAD below the knee through
a small 4 Fr access site in the groin or to treat the upper leg
from access sites below the knee. This new product offering further
demonstrates our ability to expand the market for treatment of
peripheral artery disease.”
ORBIT II Two-Year Data Presented at Cardiovascular Research
Technologies (CRT) Conference 2015CSI completed ORBIT II
enrollment of 443 patients at 49 U.S. medical centers in November
2012. The pivotal study evaluated the safety and efficacy of the
company’s orbital atherectomy technology in treating patients with
de novo severely calcified coronary lesions. ORBIT II was the first
study in history to evaluate this problematic subset of patients.
In October 2013, CSI received PMA approval from the FDA to market
its Diamondback 360 Coronary OAS as a treatment for severely
calcified coronary arteries to facilitate stent placement.
At CRT 2015, Dr. Jeffrey Chambers of Metropolitan Heart and
Vascular Institute, Minneapolis, Minn., presented ORBIT II two-year
data that demonstrated positive freedom from major adverse cardiac
events (MACE) rates, including freedom from target lesion
revascularization (TLR) of 93.8 percent, for this
difficult-to-treat patient population.
Martin said, “The two-year ORBIT II data reaffirms that CSI’s
orbital atherectomy technology is a safe and effective treatment
option for severely calcified coronary arteries. Demonstrating
compelling patient outcomes at two years sets CSI apart from other
therapies. In addition, recent five-year results in a 33 patient
single center subset of our ORBIT I trial showed freedom from TLR
of 97 percent. This provides further evidence that treatment with
our device results in durable outcomes.”
In May 2015, Dr. Chambers will follow up two-year patient
outcomes data with a long-term (one-year) economic analysis of
Diamondback 360® Coronary OAS in treating severely calcified
lesions at the Society for Cardiovascular Angiography and
Interventions (SCAI) 2015 Scientific Sessions.
LIBERTY 360° Trial Enrolls 800th
PatientLIBERTY 360° is a prospective, observational,
multi-center clinical study evaluating acute and long-term
clinical, quality of life and economic outcomes of endovascular
device intervention in patients with distal outflow peripheral
arterial disease. This study is designed to compare the long-term
clinical and economic outcomes of CSI’s PAD systems to other
treatment alternatives. In April, CSI enrolled the 800th patient,
an increase of approximately 550 since June 30, 2014.
Asahi Intecc Distribution Agreement to Expire June 30,
2015Since 2009, CSI has been the exclusive distributor of Asahi
Intecc (Asahi) peripheral guidewires in the United States. This
distribution agreement will expire on June 30, 2015. At that time,
Asahi plans to begin selling its peripheral wires direct. During
the recently completed fiscal third quarter, revenue from Asahi
guidewires was not a material amount of CSI’s total revenue.
Martin commented, “Our partnership with Asahi was designed to
deliver effective solutions to patients suffering from PAD – and
this collaboration has been a success for both companies. However,
with a growing number of our sales representatives trained to sell
both of our high-growth, high-margin, peripheral and coronary
applications, CSI is focused on driving the continued rapid
adoption of our OAS platform.”
Fiscal 2015 Fourth-Quarter OutlookMartin said, “CSI is
now nine months into the execution of our sales optimization
strategy, with over half of our sales representatives trained to
sell both the peripheral and coronary OAS. This transition requires
a significant investment in sales force time and expense; however,
we believe that a single sales organization for both applications
will result in attractive revenue growth and profitability over the
long term.”
For the fiscal 2015 fourth quarter ending June 30, 2015, CSI
anticipates:
- Revenue growth of 24 percent to 28
percent over the fourth quarter of fiscal 2014, to a range of $49.0
million to $50.5 million;
- Gross profit as a percentage of
revenues approximately 50 basis points higher than the third
quarter of fiscal 2015;
- Operating expenses approximately 3
percent higher than the third quarter of fiscal 2015; and
- Net loss in the range of $(9.0) million
to $(10.0) million, or loss per common share ranging from $(0.28)
to $(0.31), assuming 31.8 million average shares outstanding.
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 third-quarter results today, April
29, 2015, at 3:45 p.m. CT (4:45 p.m. ET). To access the call, dial
(877) 201-0168 and enter access number 10416029. Please dial in at
least 10 minutes prior to the call and wait for assistance. 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 access number 10416029. The audio replay will be
available beginning at 6:45 p.m. CT on Wednesday, April 29, 2015,
through 10:59 p.m. CT on Wednesday, May 6, 2015.
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 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
percent 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. To
date, nearly 200,000 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) CSI’s ability to expand the market for treatment of
peripheral artery disease and calcified coronary disease; (ii) the
$14.0 billion market opportunity represented by critical limb
ischemia and calcified coronary disease; (iii) the LIBERTY 360°
trial; (iv) the expectation that a single sales organization will
result in attractive revenue growth and profitability over the long
term; and (v) anticipated revenue, gross profit, operating
expenses, and net loss, 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, dependence on market growth; the reluctance of
physicians, hospitals and other organizations to accept new
products; the experience of physicians regarding the effectiveness
and reliability of CSI’s products; actual clinical trial and study
results; the potential for unanticipated delays in enrolling
medical centers and patients for clinical trials; the impact of
competitive products and pricing; the difficulty to successfully
manage operating costs; fluctuations in quarterly results;
agreements with third parties to sell their products; regulatory
developments in the U.S. and foreign countries; FDA and
international regulatory clearances and approvals; approval of our
products for distribution in foreign countries; approval of
products for reimbursement and the level of reimbursement; 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® and Diamondback 360®
Peripheral Orbital Atherectomy Systems 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.
Cardiovascular Systems, Inc. Consolidated
Statements of Operations (Dollars in Thousands)
(unaudited) Three Months Ended
Nine Months Ended March 31, March 31,
2015 2014 2015
2014 Revenues $ 47,004 $ 34,945 $ 133,090 $ 97,048
Cost of goods sold 10,416 7,749
28,647 21,926 Gross profit 36,588 27,196
104,443 75,122 Expenses: Selling, general and administrative 39,354
31,428 105,414 84,267 Research and development 7,777
5,361 23,014 14,790 Total
expenses 47,131 36,789 128,428
99,057 Loss from operations (10,543 ) (9,593 )
(23,985 ) (23,935 ) Interest and other, net (113 )
(119 ) (168 ) (1,727 ) Net loss $ (10,656 ) $ (9,712
) $ (24,153 ) $ (25,662 ) Net loss per common share: Basic
and diluted $ (0.34 ) $ (0.32 ) $ (0.77 ) $ (0.94 ) Weighted
average common shares used in computation: Basic and diluted
31,644,522 30,368,685 31,479,803
27,411,237
Cardiovascular Systems,
Inc. Consolidated Balance Sheets (Dollars in
Thousands) (unaudited)
March
31,
June
30,
2015 2014 ASSETS Current assets Cash and cash
equivalents $ 93,485 $ 126,592 Accounts receivable, net 31,220
21,383 Inventories 13,219 12,890 Prepaid expenses and other current
assets 3,904 1,846 Total current assets 141,828
162,711 Property and equipment, net 32,359 15,297 Patents, net
4,399 3,823 Other assets 40 70 Total assets $ 178,626
$ 181,901
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities Short-term borrowings
$
─
$ 2,400 Accounts payable 17,527 12,699 Accrued expenses
16,356 14,630 Total current liabilities 33,883 29,729
Long-term liabilities Other liabilities 2,004 117
Total long-term liabilities 2,004 117 Total
liabilities 35,887 29,846 Commitments and contingencies Total
stockholders' equity 142,739 152,055 Total
liabilities and stockholders' equity $ 178,626 $ 181,901
Cardiovascular Systems, Inc. Supplemental Sales
Information (Dollars in Thousands) (unaudited)
Three Months Ended
Nine Months Ended March 31, March 31,
2015 2014 2015
2014 Device revenue $ 41,817 $ 30,860 $ 118,292 $
85,508 Other product revenue 5,187 4,085
14,798 11,540 Total revenue $
47,004 $ 34,945 $ 133,090 $ 97,048
Device units sold: PAD 11,304 9,514 32,812 27,348 CAD
2,020 460 4,912 563
Total device units sold 13,324 9,974
37,724 27,911 New
customers: PAD 53 46 172 154 CAD (1) 37 22 141 33 Reorder
revenue % 95 % 96 % 96 % 96 %
(1) New CAD customers now exclude those in
the early stage of product introduction and training.
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 Nine Months
Ended March 31, March 31, 2015
2014 2015 2014
Loss from operations $ (10,543 ) $ (9,593 ) $ (23,985 ) $ (23,935 )
Add: Stock-based compensation 3,956 2,827 11,039 7,682 Add:
Depreciation and amortization 583 353
1,417 982 Adjusted EBITDA $ (6,004 ) $
(6,413 ) $ (11,529 ) $ (15,271 )
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. Cardiovascular Systems, Inc.
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.
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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