Conference Call Scheduled for Today,
November 4, 2015, at 3:45 PM CT (4:45 PM ET)
- Revenues of $43.9 million and net
loss of $(0.41) per share were in line with preliminary results
guidance range
- Company enrolls first patients in
OPTIMIZE study
- LIBERTY 360° study update provided
at VIVA Conference; enrollment exceeds 1,100, including over 600
patients with Rutherford classification stages of 4, 5 and
6
- TRUTH study demonstrates that CSI’s
Orbital Atherectomy System is effective at reducing and modifying
calcium
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, 2015, that were in line with the
preliminary results reported on October 7, 2015.
The company’s first quarter revenues of fiscal 2016 were $43.9
million, an 11% increase from $39.5 million in the fiscal first
quarter of 2015, excluding $1.9 million from the sale of Asahi
guide wires in the prior-year period. Coronary units sold increased
76% to over 2,200, while peripheral units sold increased 9% to over
11,000. Customer reorder revenues remained strong at 97% of total
revenue, similar to the comparable period one year ago.
David L. Martin, CSI’s President and Chief Executive Officer,
said, “Our sales optimization strategy to train our sales
representatives to sell both our coronary and peripheral product
lines in focused territories, while expanding our sales force, is a
significant undertaking. However, we believe it’s the right
strategy for sustained revenue growth and future profitability. In
October, we made several adjustments to our strategy to improve
implementation, which should result in improved performance in the
second half of fiscal year 2016.”
CSI’s fiscal 2016 first-quarter gross profit margin increased to
80.0% from 78.5%, reflecting unit cost reductions over the
prior-year period. Net loss was $(13.3) million, or $(0.41) per
common share, compared to a net loss of $(8.2) million, or $(0.26)
per common share, in the fiscal 2015 first quarter. Adjusted EBITDA
loss was $(8.2) million compared to $(4.2) million a year earlier.
Overall, expense levels were lower than anticipated, primarily due
to a fewer number of sales representatives than expected and timing
of projects and studies.
Cardiovascular Systems Enrolls First Patients In OPTIMIZE
StudyOn October 28, CSI enrolled the first patients in its
OPTIMIZE peripheral Orbital Atherectomy System (OAS) study.
OPTIMIZE is a prospective, randomized, multi-center, post-market
pilot study enrolling up to 50 subjects at up to 10 study sites in
Europe. The study will evaluate the acute and long-term clinical
outcomes of orbital atherectomy with adjunctive drug-coated balloon
(DCB) angioplasty versus DCB angioplasty alone for treatment of
Peripheral Artery Disease (PAD). Specifically, the study will look
at patients with calcified below the knee (BTK) lesions. OPTIMIZE
also will compare the economic outcomes between the patient
groups.
Professor Marianne Brodmann, M.D., Director of the Division of
Angiology, Medical University of Graz, Austria, performed the first
procedure on October 28 together with Hannes Deutschmann, Director
of the Vascular and Interventional Department of Radiology, Medical
University of Graz, Austria and Dr. Franz Hafner.
“Studying the combination of orbital atherectomy and drug-coated
balloon angioplasty is an important step in our commitment to
minimize the adverse consequences of PAD for the millions of people
afflicted with calcified artery disease and to dramatically reduce
the number of amputations performed,” said Martin. “Our goal is to
show that for calcified BTK arteries, pre-treatment with orbital
atherectomy followed with DCB will improve outcomes compared to DCB
angioplasty alone.”
LIBERTY 360° Study Enrollment Shared at VIVA
ConferenceLIBERTY 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.
At VIVA, Dr. George Adams provided updated enrollment statistics
for LIBERTY 360°. He noted that over 1,100 patients have been
enrolled to date, including over 600 patients that have advanced
disease, with Rutherford classification stages of 4, 5 and 6. CSI
is currently enrolling up to 1,200 patients in this study, with
anticipated enrollment completion in early calendar 2016.
Demographic data from this study is expected to be presented in
early 2016.
TRUTH StudyOne-year results from CSI’s Tissue Removal
Assessment with Ultrasound of the SFA and Popliteal (TRUTH) study,
a prospective, single-arm, non-randomized feasibility study of 25
patients were recently featured in Vascular and Endovascular
Surgery.
It is the first study to present detailed IVUS measurements of
plaque modification during treatment of calcified lesions via
orbital atherectomy in patients with PAD. TRUTH data was compiled
using an independent virtual histology – IVUS core laboratory. The
results demonstrated that OAS treatment is effective at reducing
and modifying calcium from lesions, resulting in low acute
complications and improved Rutherford classification. The minimum
lumen area increased from 4 mm² to over 9 mm² and, after 12 months,
freedom from target lesion revascularization was about 92%. Calcium
reduction was responsible for 86% of the lumen area increase.
Fiscal 2016 Second-Quarter OutlookMartin said, “As part
of our sales optimization refinements, we reduced revenue
expectations for our sales representatives to allow more time to
drive sustainable adoption in their accounts. We’ve also added a
significant number of new representatives who will have limited
initial productivity, which will improve over time. These factors
have reduced near term financial performance; however, we expect
improvement in the second half of this fiscal year and beyond.”
For the fiscal 2016 second quarter ending December 31, 2015, CSI
anticipates:
- Revenue in a range of $42.5 million to
$44.0 million;
- Gross profit as a percentage of
revenues similar to the first quarter of fiscal 2016;
- Operating expenses approximately 5%
higher than the first quarter of fiscal 2016, primarily due to a
greater number of sales representatives and the timing of projects
and studies; and
- Net loss in the range of $(15.8)
million to $(16.7) million, or loss per common share ranging from
$(0.49) to $(0.51), assuming 32.6 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 fourth-quarter results today,
November 4, 2015, at 3:45 p.m. CT (4:45 p.m. ET). To access the
call, dial (877) 201-0168 and enter the access number 65027583.
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 65027583. The audio replay will be available beginning at
6:45 p.m. CT on Wednesday, November 4, 2015, through 10:59 p.m. CT
on Wednesday, November 11, 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% 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 220,000 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) our belief that our sales optimization strategy is
the right strategy for sustained revenue growth and future
profitability; (ii) our expectation that the adjustments we made to
our strategy to improve implementation should result in improved
performance in the second half of fiscal year 2016; (iii) the
OPTIMIZE study, including the number of patients to be enrolled and
the number of study sites; (iv) the LIBERTY 360° trial, including
the number of patients expected to be enrolled, the timing of
enrollment, and the timing of the release of data from the study;
(v) our expectation that reducing revenue expectations for our
sales representatives and adding a significant number of new
representatives will improve growth in the second half of this
fiscal year and beyond; and (vi) anticipated revenue, gross profit,
operating expenses, and net loss. 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; 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
to successfully manage operating costs; our inability to expand our
sales and marketing organization; our ability to manage employee
turnover, growth and training; our actual research and development
efforts and needs; fluctuations in results and expenses based on
new product introductions, sales mix, unanticipated warranty
claims, and the timing of project expenditures; 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.
Cardiovascular Systems, Inc. Consolidated
Statements of Operations (Dollars in Thousands)
(unaudited) Three Months Ended
September 30, 2015 2014
Revenues $ 43,871 $ 41,354 Cost of goods sold 8,771
8,885 Gross profit 35,100 32,469 Expenses: Selling,
general and administrative 41,395 33,507 Research and development
6,941 7,152 Total expenses
48,336 40,659 Loss from operations (13,236 )
(8,190 ) Interest and other, net (25 ) (34 ) Net loss
$ (13,261 ) $ (8,224 ) Net loss per common share: Basic and
diluted $ (0.41 ) $ (0.26 ) Weighted average common shares
used in computation: Basic and diluted 32,210,874
31,311,110
Cardiovascular Systems,
Inc. Consolidated Balance Sheets (Dollars in
Thousands) (unaudited) September
30,
June
30,
2015 2015 ASSETS Current assets Cash and cash
equivalents $ 76,651 $ 83,842 Accounts receivable, net 26,864
30,830 Inventories 15,446 13,966 Marketable securities 1,794 1,876
Prepaid expenses and other current assets 2,603 3,380
Total current assets 123,358 133,894 Property and equipment, net
33,711 32,883 Patents, net 4,787 4,511 Other assets 534
40 Total assets $ 162,390 $ 171,328
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $
9,815 $ 9,763 Accrued expenses 20,047 20,125 Total
current liabilities 29,862 29,888 Long-term liabilities Other
liabilities 1,916 2,005 Total liabilities 31,778
31,893 Commitments and contingencies Total stockholders' equity
130,612 139,435 Total liabilities and stockholders'
equity $ 162,390 $ 171,328
Cardiovascular Systems,
Inc. Supplemental Sales Information (Dollars in
Thousands) (unaudited)
Three Months Ended September 30, 2015
2014 Device revenue $ 40,575 $ 36,509
Other product revenue (2) 3,296 4,845
Total revenue $ 43,871 $ 41,354 PAD
revenue (2) $ 35,180 $ 36,390 CAD revenue 8,691
4,964 Total revenue $ 43,871 $ 41,354
New customers(1): PAD 50 57 CAD 47 37 Reorder revenue
% 97 % 97 %
(1) Excludes accounts in the early stage of product introduction
and training.
(2) Revenue amounts for 2014 include $1,873 from sale of Asahi
guide wires under a distribution agreement that terminated on June
30, 2015.
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, 2015 2014
Loss from operations $ (13,236 ) $ (8,190 ) Add: Stock-based
compensation 4,107 3,573 Add: Depreciation and amortization
940 408 Adjusted EBITDA $ (8,189 ) $ (4,209 )
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/20151104006669/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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