Conference Call Scheduled for Today,
February 3, 2022, at 8:00 a.m. CT (9:00 a.m. ET)
- Revenues of $59.1 million increased 1.3% sequentially
compared to first quarter this year and decreased 7.8% compared to
second quarter last year
- Procedure volumes adversely impacted by hospital constraints
and staffing shortages caused by Covid-19
- Fiscal year 22 revenue guidance lowered to $235 million to
$245 million
- Developing intravascular lithotripsy (IVL) technology for
the treatment of coronary and peripheral artery diseases
- Scoreflex® NC scoring balloon received FDA PMA
approval
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
second quarter, ended December 31, 2021.
Executive Commentary – Scott Ward, Chairman, President and
CEO
“Our second quarter revenues reflect another period where our
domestic business was pressured primarily by lower procedure
volumes related to hospital capacity issues and staffing shortages
caused by Covid-19.
“Our recovery from the Delta variant was suppressed by the
arrival of Omicron in December. Consistent with past surges, the
impact was more acute in the peripheral claudication segment of our
business, which is deemed more deferrable and is more susceptible
to the long-term havoc created by Covid.
“We continue to believe the current trend is temporary and that
many of these procedures will be regained as the Omicron surge
declines, the healthcare system recovers, and patients return to
hospitals and clinics for long-overdue interventions. It is
difficult to predict the exact timing, but we fully expect a
backlog of cases to gradually flow through our accounts at some
point after this latest wave recedes.
“Partially offsetting the lower procedure volumes experienced in
our domestic business, international revenues increased 10.1%
sequentially compared to first quarter. During the second quarter,
we launched coronary atherectomy in six new countries and certified
72 new physicians. We remain on track to be commercial in over 30
countries by fiscal year end.
“Even more encouraging, we continue to make strong progress on
our long-term strategy to expand our product portfolio and broaden
our revenue streams. During the second quarter, we announced the
commencement of enrollment in a first in-human trial of a coronary
everolimus drug-coated balloon. More recently, we announced our
development of intravascular lithotripsy balloons for the treatment
of coronary and peripheral artery diseases. We also announced that
FDA granted PMA approval of the Scoreflex scoring balloon. Finally,
we completed several important development and pre-clinical testing
milestones on our pVAD device for high-risk PCI, and we plan to
conduct our first in-human clinical experience outside the U.S.
later this fiscal year.”
Second Quarter Financial Highlights
CSI’s fiscal 2022 second quarter revenues were $59.1 million,
representing a decrease of $5.0 million, or 7.8% compared to the
second quarter last year. Gross profit margin was 69.4% due to a
one-time charge related to the voluntary recall of the WIRION
embolic protection device and lower orbital atherectomy volumes.
Excluding the $2.8 million one-time charge, gross profit margin was
74.3%.
Selling, general and administrative expenses were $40.4 million,
an increase of $0.3 million, or 0.9%. Research and development
expenses decreased 7.6% to $8.9 million due to timing of
development activities.
Second-quarter net loss of $9.0 million, or $0.23 per basic and
diluted share, compared unfavorably to near breakeven in the prior
year period. Adjusted EBITDA was a loss of $3.0 million, as
compared to a profit of $5.2 million in the prior year.
As of December 31, 2021, CSI had cash and marketable securities
totaling $176.5 million and no long-term borrowings.
Fiscal Year 2022 Guidance
Ward added, “The Omicron variant has constrained our sales since
the surge began in December. We expect that hospital capacity
constraints could begin to ease in late February and our procedure
volumes may gradually improve beginning in mid-March. As a result,
we expect domestic revenue to decline sequentially in the third
quarter and gradually improve in fourth quarter. Although the
timing and magnitude of the recovery is difficult to predict due to
the dynamics introduced by labor shortages, we do expect sequential
growth to resume in fourth quarter.”
For the fiscal year ending June 30, 2022, CSI anticipates:
- Revenue of $235 million to $245 million;
- Gross profit as a percentage of approximately 73% of
revenues;
- Net loss in a range of 15% to 18% of revenues; and
- Adjusted EBITDA loss in a range of 4% to 7% of revenues.
Conference Call Scheduled for Today at 8:00 a.m. CT (9:00
a.m. ET)
CSI will host a live conference call and webcast of its fiscal
second quarter results today, February 3, 2022, at 8:00 a.m. CT
(9:00 a.m. ET). To access the live webcast, please register for the
webcast here.
To participate in the conference call, please register for the
conference call here.
Developing IVL technology for the
treatment of coronary and peripheral artery diseases As
previously announced on January 13, CSI has made significant
progress towards the commercialization of IVL systems for the
treatment of calcific coronary and peripheral artery disease.
Received FDA PMA approval of Scoreflex
scoring balloon As previously announced on January 20,
the OrbusNeich Scoreflex® NC Scoring Percutaneous
Transluminal Coronary Angioplasty Catheter received FDA PMA
approval. CSI is the exclusive U.S. distributor of Scoreflex
NC.
About Coronary Artery Disease (CAD)
CAD is a life-threatening condition and a leading cause of death
in men and women globally. 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 Centers for Disease Control and
Prevention, 18 million people in the United States have CAD, the
most common form of heart disease. Heart disease claims more than
650,000 lives in the United States each year. According to
estimates, arterial calcium is present in 38 percent of patients
undergoing a PCI. Significant calcium contributes to poor stent
delivery, expansion and wall apposition leading 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 Peripheral Artery Disease (PAD)
Eighteen to 20 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.
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.
About OrbusNeich
OrbusNeich is a global pioneer in the provision of life-changing
vascular solutions and offers an extensive portfolio of products
that set industry benchmarks in vascular intervention. Current
products include the world's first dual therapy stents, the COMBO®
Plus and COMBO® Dual Therapy Stents, together with stents and
balloons marketed under the names of Azule®, Scoreflex®, Scoreflex®
NC, Sapphire® II, Sapphire® II PRO, Sapphire® 3, Sapphire® II NC
Sapphire® NC24, Sapphire® NC Plus, Teleport® and Teleport® Control,
as well as products to treat peripheral artery disease: the Jade®
and Scoreflex® PTA balloons. OrbusNeich is headquartered in Hong
Kong and has operations in Shenzhen, China; Fort Lauderdale,
Florida, USA; Hoevelaken, The Netherlands; Zuchwil, Switzerland;
and regional sales offices in Germany, France, Switzerland, Spain,
Japan, Hong Kong, Singapore, China and Malaysia. OrbusNeich
supplies medical devices to physicians in more than 60 countries.
For more information, visit www.OrbusNeich.com.
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) the ongoing COVID-19 pandemic and its
potential impact on our business, including trends in procedure
volumes, the effects on the healthcare system, staffing shortages,
patients returning for interventions, and case backlogs; (iii)
geographic expansion; (iv) expansion of our product portfolio and
broadening of our revenue streams, including the specific products,
clinical trials and experiences, and timing thereof; (v) our
expectations regarding the easing of hospital capacity constraints,
improvement in procedure volumes, domestic revenue levels, and the
return of sequential growth; and (vi) anticipated revenue, gross
profit, net loss and Adjusted EBITDA, 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 partners; 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; successful
collaboration on the development of new products; agreements with
development partners, advisors and other third parties; the ability
of CSI and these third parties to meet development, contractual and
other milestones; contractual rights and obligations; technical
challenges; 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; the potential impact of
any future strategic transactions; 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 and CE
Marked.
Cardiovascular Systems,
Inc.
Consolidated Statements of
Operations
(Dollars in Thousands)
(unaudited)
Three Months Ended
Six Months Ended
December 31
December 31
2021
2020
2021
2020
Net revenues
$
59,135
$
64,169
$
117,505
$
124,713
Cost of goods sold
18,073
13,920
32,381
26,484
Gross profit
41,062
50,249
85,124
98,229
Expenses:
Selling, general and administrative
40,402
40,061
82,253
80,343
Research and development
8,873
9,601
18,895
18,653
Amortization of intangible assets
346
304
650
608
Total expenses
49,621
49,966
101,798
99,604
(Loss) income from operations
(8,559
)
283
(16,674
)
(1,375
)
Other (income) and expense, net
345
276
712
631
(Loss) income before income taxes
(8,904
)
7
(17,386
)
(2,006
)
Provision for income taxes
63
63
199
126
Net loss
$
(8,967
)
$
(56
)
$
(17,585
)
$
(2,132
)
Basic and diluted earnings per share
$
(0.23
)
$
—
$
(0.45
)
$
(0.06
)
Basic and diluted weighted average shares
outstanding
39,199,593
38,808,980
39,143,533
38,746,410
Cardiovascular Systems,
Inc.
Consolidated Balance
Sheets
(Dollars in Thousands)
(unaudited)
December 31,
June 30,
2021
2021
ASSETS
Current assets
Cash and cash equivalents
$
65,865
$
71,070
Marketable securities
110,675
135,968
Accounts receivable, net
34,944
40,033
Inventories
31,671
32,313
Prepaid expenses and other current
assets
4,842
5,285
Total current assets
247,997
284,669
Property and equipment, net
29,397
28,894
Intangible assets, net
16,426
15,376
Strategic investments
29,666
20,657
Other assets
2,914
2,971
Total assets
$
326,400
$
352,567
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
12,493
$
14,061
Accrued expenses
26,666
38,189
Deferred revenue
2,721
2,400
Total current liabilities
41,880
54,650
Long-term liabilities
Financing obligation
20,456
20,596
Deferred revenue
752
2,194
Other liabilities
3,787
4,169
Total liabilities
66,875
81,609
Commitments and contingencies
—
—
Total stockholders’ equity
259,525
270,958
Total liabilities and stockholders’
equity
$
326,400
$
352,567
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. This
release also references gross profit margin, excluding WIRION
recall charge.
Reconciliations of these non-GAAP measures to the most
comparable U.S. GAAP measures for the respective periods can be
found in the following tables. In addition, an explanation of the
manner in which CSI's management uses these measures to conduct and
evaluate its business, the economic substance behind management's
decision to use these measures, the substantive reasons why
management believes that these measures provide useful information
to investors, the material limitations associated with the use of
these measures and the manner in which management compensates for
those limitations is included following the reconciliation
tables.
Adjusted EBITDA
(Dollars in Thousands)
(unaudited)
Three Months Ended
Six Months Ended
December 31
December 31
2021
2020
2021
2020
Net loss
$
(8,967
)
$
(56
)
$
(17,585
)
$
(2,132
)
Less: Other (income) and expense, net
345
276
712
631
Less: Provision for income taxes
63
63
199
126
Loss from operations
(8,559
)
283
(16,674
)
(1,375
)
Add: Stock-based compensation
4,240
3,877
9,912
8,784
Add: Depreciation and amortization
1,287
1,058
2,545
2,087
Adjusted EBITDA
$
(3,032
)
$
5,218
$
(4,217
)
$
9,496
Gross Profit and Gross Margin
(Excluding WIRION Recall Charge) (Dollars in Thousands)
(unaudited)
Three Months Ended
December 31
2021
2020
Gross profit
$
41,062
$
50,249
Less: WIRION recall charge
2,849
—
Gross profit (excluding WIRION recall
charge)
$
43,911
$
50,249
Three Months Ended
December 31
2021
2020
Gross margin
69.4
%
78.3
%
Less: WIRION recall charge as percentage
of net revenues
4.9
%
—
%
Gross margin (excluding WIRION recall
charge)
74.3
%
78.3
%
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, stock-based compensation,
and in-process research and development (IPR&D) charges. 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.
-- IPR&D charges incurred in connection with asset
acquisitions. CSI excludes charges incurred in connection with
acquired IPR&D in asset acquisitions from its non-GAAP
financial measures given the one-time nature of such expense, which
is not used by CSI’s management to assess the core profitability of
its business operations. There may be fiscal periods where we do
not incur these charges and therefore they may not be included
within the table above.
In addition, CSI uses gross profit margin, excluding WIRION
recall charge, in this release. CSI excludes certain one-time
charges and costs from this item primarily because such expenses
are not ongoing and recurring expenses. CSI’s management believes
that excluding these charges is useful to investors to understand
CSI’s core operational performance for the periods presented.
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220203005207/en/
Cardiovascular Systems, Inc. Jack Nielsen Vice President,
Investor Relations & Corporate Communications (651) 202-4919
j.nielsen@csi360.com
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