Conference Call Scheduled for Today, January
21, 2016, at 3:45 PM CT (4:45 PM ET)
- Revenues of $41.4 million were 3%
below the guidance range due to continued effects of the sales
force transition
- Gross margin increased to 80.5%,
primarily benefiting from lower unit costs
- Net loss of $(0.47) per share was
favorable to guidance, primarily as a result of cost
reductions
- LIBERTY 360° enrollment nears
completion, demographic data to be presented at ISET as a
late-breaking presentation
- COAST 30-day data also to be
featured as a late-breaking presentation at CRT
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 second
quarter ended December 31, 2015.
The company’s second quarter revenues of fiscal 2016 were $41.4
million, a 4% decrease from the second quarter of fiscal 2015,
excluding revenue from Asahi guide wires in the prior-year period.
Coronary revenues increased 33% to $8.6 million. Customer reorder
revenues remained strong at 97% of total revenue, an increase from
95% in the comparable period last year.
Scott Ward, CSI’s Chairman and Interim President and Chief
Executive Officer, said, “CSI’s sales force expansion and
implementation of a dual franchise model, selling both coronary and
peripheral applications, has been challenging and is affecting our
near term sales performance. We have gained meaningful insights
during the transition and we are encouraged by recent progress. The
sales organization continues to gain valuable experience and we
have begun to adjust our sales model at the local level, adopting a
more flexible approach where warranted. We remain confident that
our sales strategy will lead to sustainable revenue growth and a
pathway to profitability in the future.”
CSI’s fiscal 2016 second-quarter gross profit margin increased
to 80.5% from 79.1%, reflecting unit cost reductions over the
prior-year period. Net loss was $(15.2) million, or $(0.47) per
common share, compared to a net loss of $(5.3) million, or $(0.17)
per common share, in the fiscal 2015 second quarter. Adjusted
EBITDA loss was $(11.1) million versus $(1.3) million a year
earlier. Overall, expense levels were lower than anticipated,
primarily due to cost controls, refinements to the sales model, and
timing of projects and studies.
“Managing our cash position is a top priority for CSI. We are
setting the company on a balanced course to achieve revenue growth
and reduce losses, establishing a pathway to profitability. With
ongoing cost management, our cash position, debt capacity, and the
potential to finance our $25 million Minnesota facility, should
provide sufficient capital to bridge us to profitability and
positive cash flow,” said Ward.
LIBERTY 360° Enrollment Nears Completion, Demographic Data to
be Featured in Late-Breaking Presentation at ISETOn February 9,
2016, key demographic data from the LIBERTY 360° study will be
featured in a late-breaking presentation at the 28th International
Symposium of Endovascular Therapy (ISET) in Hollywood, Fla.
The study’s principal investigators — Dr. Jihad Mustapha of
Metro Health Hospital in Wyoming, Mich.; Dr. George L. Adams, Rex
Healthcare, Raleigh N.C.; Dr. William Gray, Columbia University
Medical Center, New York; Dr. Gary Ansel, Riverside Methodist
Hospital, Columbus, Ohio; and Dr. Michael Jaff, Massachusetts
General Hospital, Boston, Mass., are expected to highlight the
unique aspects of the first 600 patients enrolled in LIBERTY
360°.
LIBERTY 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 (PAD).
Enrollment of all 1,200 patients is nearly complete. The company
plans to present 30-day data from this study in fall 2016.
COAST 30-day Data to be Highlighted in a Late-Breaking
Presentation at CRT 2016In February 2016, Dr. Richard Shlofmitz
of Saint Francis Hospital in Roslyn, N.Y., will present 30-day data
from the Coronary Orbital Atherectomy System Trial (COAST) study in
a late-breaking presentation at the Cardiovascular Research
Technologies (CRT) conference in Washington, D.C.
COAST is built on CSI’s ORBIT II study, which was the first
trial designed to enroll severely calcified coronary lesions that
are typically excluded from major clinical trials, but commonly
seen in real-world cases. COAST is a prospective, single-arm,
multi-center, global, investigational study designed to evaluate
the safety and efficacy, as well as economic outcomes, of CSI’s new
Diamondback 360® Coronary Orbital Atherectomy System (OAS) Micro
Crown.
“Our first international coronary study is designed to support
the approval of our next-generation system in the United States and
Japan,” said Ward. “COAST aligns with our ORBIT II clinical
protocol and study design. We believe that data from this study
will highlight the potential benefits of our new Micro Crown and
ultimately help secure commercial approval in Japan, the world’s
second largest coronary market.”
The Micro Crown is CSI’s second-generation system designed to
facilitate stent delivery in subjects with severely calcified
coronary lesions who are acceptable candidates for percutaneous
transluminal coronary angioplasty (PTCA), or stenting. The Micro
Crown is designed to immediately engage tight lesions with distal
sanding while allowing continuous flow during operation.
Fiscal 2016 Third-Quarter OutlookWard said,
“Implementation of our dual franchise sales strategy, including the
development and maturation of our sales representatives, is
progressing; however, it will take more time for that progress to
be reflected in revenue growth. We believe that many of the
transition challenges will be behind us toward the end of the third
quarter, with sales productivity improving in the fourth quarter of
this fiscal year.”
For the fiscal 2016 third quarter ending March 31, 2016, CSI
anticipates:
- Revenue in a range of $40.5 million to
$42 million;
- Gross profit as a percentage of
revenues of about 80 percent;
- Operating expenses approximately 3%
lower than the second quarter of fiscal 2016; and
- Net loss in the range of $(13.7)
million to $(14.6) million, or loss per common share ranging from
$(0.42) to $(0.45), assuming 32.8 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 second-quarter results today,
January 21, 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 21694741.
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 21694741. The audio replay will be available beginning at
6:45 p.m. CT on Thursday, January 21, 2016, through 10:59 p.m. CT
on Thursday, January 28, 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 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, nearly 235,000 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 confidence that our sales strategy will lead to
sustainable revenue growth and a pathway to profitability in the
future; (ii) our belief that ongoing cost management, our cash
position, debt capacity and the potential to finance our $25
million Minnesota facility should provide sufficient capital to
bridge us to profitability and positive cash flow; (iii) the
LIBERTY 360° study, including the number of patients expected to be
enrolled, the timing of enrollment, the results of the study, and
the timing of the release of data from the study; (iv) the COAST
trial, including the results of the trial and the timing of the
release of data from the trial; (v) the approval of our
next-generation system in the United States and Japan; (vi) the
progress being made in our sales force strategy and our belief that
it will take more time for that progress to be reflected in revenue
growth; (vii) our belief that many of the transition challenges
will be behind us toward the end of the third quarter, with sales
productivity improving in the fourth quarter of this fiscal year;
and (viii) 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 sustain growth in our
sales and marketing organization; our ability to manage employee
turnover, growth and training; our ability to manage our sales
force expansion and dual franchise strategy; 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; our ability to secure financing; our ability to
manage costs; 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 Six Months Ended
December 31, December 31, 2015
2014 2015 2014 Net revenues $
41,392 $ 44,732 $ 85,263 $ 86,086 Cost of goods sold 8,071
9,346 16,842 18,231
Gross profit 33,321 35,386 68,421 67,855 Expenses: Selling,
general and administrative 41,258 32,553 82,653 66,060 Research and
development 7,206 8,085 14,147
15,237 Total expenses 48,464
40,638 96,800 81,297 Loss
from operations (15,143 ) (5,252 ) (28,379 ) (13,442 ) Interest and
other, net (20 ) (21 ) (45 ) (55 ) Net
loss $ (15,163 ) $ (5,273 ) $ (28,424 ) $ (13,497 ) Net loss
per common share: Basic and diluted $ (0.47 ) $ (0.17 ) $ (0.88 ) $
(0.43 ) Weighted average common shares used in computation:
Basic and diluted 32,553,991 31,487,358
32,382,433 31,399,234
Cardiovascular Systems, Inc.
Consolidated Balance Sheets
(Dollars in Thousands)
(unaudited)
December 31, June 30,
2015 2015 ASSETS Current assets Cash and cash
equivalents $ 65,329 $ 83,842 Accounts receivable, net 25,752
30,830 Inventories 18,237 13,966 Marketable securities 1,871 1,876
Prepaid expenses and other current assets 1,577 3,380
Total current assets 112,766 133,894 Property and equipment, net
33,564 32,883 Patents, net 4,759 4,511 Other assets 136
40 Total assets $ 151,225 $ 171,328
LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $
8,313 $ 9,763 Accrued expenses 19,651 20,125 Total
current liabilities 27,964 29,888 Long-term liabilities Other
liabilities 1,986 2,005 Total liabilities 29,950
31,893 Commitments and contingencies Total stockholders' equity
121,275 139,435 Total liabilities and stockholders'
equity $ 151,225 $ 171,328
Cardiovascular Systems, Inc.
Supplemental Sales Information
(Dollars in Thousands)
(unaudited)
Three Months Ended
Six Months Ended December 31, December 31,
2015 2014 2015 2014
Device revenue $ 38,088 $ 39,966 $ 78,663 $ 76,475 Other
product revenue(2) 3,304 4,766
6,600 9,611 Total revenue $ 41,392 $
44,732 $ 85,263 $ 86,086 PAD revenue(2)
$ 32,811 $ 38,272 $ 67,991 $ 74,561 CAD revenue 8,581
6,460 17,272 11,525 Total
revenue $ 41,392 $ 44,732 $ 85,263 $ 86,086
New customers(1): PAD 46 57 96 120 CAD 60 48 107 85
Reorder revenue % 97 % 95 % 97 % 96 % (1)
Excludes accounts in the early stage of product introduction
and training. (2) Revenue amounts for the three and six months
ended December 31, 2014 include $1,796 and $3,669 from sale of
Asahi guidewires 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 Six Months Ended
December 31, December 31, 2015
2014 2015 2014 Loss from
operations $ (15,143 ) $ (5,252 ) $ (28,379 ) $ (13,442 ) Add:
Stock-based compensation 3,112 3,510 7,219 7,083 Add: Depreciation
and amortization 981 426 1,921
833 Adjusted EBITDA $ (11,050 ) $ (1,316 ) $
(19,239 ) $ (5,526 )
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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160121006389/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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