Conference Call Scheduled for Today,
November 4, 2020, at 3:30 PM CT (4:30 PM ET)
- Revenues of $60.5 million increased 42% sequentially and
decreased 6.1% compared to last year
- Net loss was $2.1 million, or $0.05 per basic and diluted
share
- Management provides fiscal 2021 second quarter revenue
guidance of $63 million to $67 million
- Kelvin Womack joins Board of Directors
- Data presented at TCT Conference demonstrates exceptional
safety and high procedural success in over 500 patients with
heavily stenosed and calcified coronary lesions
Cardiovascular Systems, Inc. (CSI®) (NASDAQ: CSII), a medical
device company developing and commercializing innovative
interventional treatment systems for patients with peripheral and
coronary artery disease, today reported financial results for its
fiscal first quarter, ended September 30, 2020.
CSI’s fiscal 2021 first-quarter revenues were $60.5 million, a
decrease of $3.9 million, or 6.1%, from the first quarter of fiscal
2020. Gross profit margin was 79.2%.
Selling, general and administrative expenses decreased 13.8% to
$40.3 million. Research and development expenses decreased 15.9% to
$9.1 million due to pausing enrollment in the ECLIPSE clinical
trial as a result of COVID-19.
First-quarter net loss of $2.1 million, or $0.05 per basic and
diluted share, compared favorably to net loss of $5.8 million, or
$0.17 per basic and diluted share, in the prior-year period.
Adjusted EBITDA totaled $4.3 million.
As of September 30, 2020, CSI had cash and marketable securities
totaling $222.9 million and no outstanding long-term debt.
Scott Ward, CSI’s Chairman, President and Chief Executive
Officer, said, “Today, we reported fiscal 2021 first quarter
revenue of $60.5 million, which represents a 6% decrease compared
to the first quarter of last year, but a sequential quarterly
increase of 42% compared to the fourth quarter of fiscal 2020. In
the US, strong sequential growth in peripheral and coronary helped
drive domestic revenue of $58.8 million, or 96% of domestic revenue
in the first quarter last year. Although our results were
negatively impacted by the pandemic, we did sustain momentum
throughout the quarter with atherectomy procedure volumes
recovering faster than expected.
“We continue to successfully manage our business during this
pandemic. Steady production volumes, favorable sales mix, and
continued cost reduction initiatives helped drive 79% gross margins
during the quarter. In addition, we reduced our operating expenses
14% compared to last year. The combination of stronger revenues,
improving gross margins and lower expenses resulted in over $4
million of adjusted EBITDA in first quarter, an improvement of
$14.9 million versus the prior quarter.”
Fiscal 2021 Second Quarter Guidance Said Ward, “The
improvement in domestic procedure volumes during first quarter
gives us confidence to continue to provide near-term financial
guidance. We remain in a very unstable environment and COVID-19
dynamics continue to introduce a high degree of variance in our
near-term outlook. Our guidance reflects the momentum that we have
established in the market, balanced by some caution emanating from
the resurgence in COVID-19 cases and hospitalizations.
For the fiscal 2021 second quarter ending December 31, 2020, CSI
anticipates:
- Revenue of $63 million to $67 million, representing sequential
revenue growth compared to the first quarter of fiscal 2021 of 4%
to 11%;
- Gross profit as a percentage of revenues in the 78% to 79%
range;
- Operating expenses in a range of $52 to $54 million;
- Net loss in a range of $1 to $3 million; and
- Positive Adjusted EBITDA
Kelvin Womack Joins Board of Directors In August, CSI
announced the addition of independent board member Kelvin
Womack.
Womack is currently the Vice President for Diversity and
Inclusion at St. Jude Children’s Research Hospital in Memphis,
Tenn. Prior to this role, he served for 30 years as a consulting
professional, primarily in the healthcare industry. His more recent
roles include leading the federal healthcare consulting practices
for Deloitte, LLP and BearingPoint, Inc.
“We are pleased to welcome Kelvin Womack as a new independent
director to the CSI board,” said Scott Ward, Chairman, President
and Chief Executive Officer. “We believe that Kelvin’s
comprehensive understanding of the healthcare industry, experience
with federal and healthcare agencies, broad technological
expertise, and status as a thought leader on diversity, inclusion
and patient care will expand our board’s understanding of critical
issues facing our business in a rapidly changing environment and
assist us as we seek to prevent unnecessary amputations and address
disparities in the treatment of peripheral and coronary artery
disease.”
CSI’s board routinely reviews its composition to ensure it
includes the necessary skills, experience and perspective to direct
its business objectives. With the addition of Mr. Womack, three
independent directors have joined CSI’s board since July 2019. The
CSI board is comprised of eight directors, seven of whom are
independent.
Data presented at TCT Conference Demonstrates Exceptional
Safety and High Procedural Success of Diamondback 360® Coronary OAS
System In October, results from a large retrospective
observational study of coronary orbital atherectomy were released
at TCT Connect 2020.
The presentation, authored by Nirat Beohar, MD, Professor of
Medicine and Vice Chief, Columbia University Division of Cardiology
at the Mount Sinai Medical Center, Miami, Fla., et al1, shows
exceptional safety and high procedural success in 519 patients with
severely calcified cardiac disease who were treated with orbital
atherectomy prior to stent deployment.
Said Beohar, “We studied over 500 patients with challenging
coronary lesions. The lesions were heavily stenosed and calcified,
measuring up to 60 mm in length. Over half were classified as
ACC/AHA Type C lesions, the most difficult anatomy. Despite
treating these most complex cases, procedural and component
angiographic complication rates were all below 1% and stents were
successfully deployed in all procedures. In this contemporary
real-world experience, OAS was found to be safe; successfully
streamlining treatment for patients with the most significant
coronary disease.”
Severe calcification of coronary lesions represents a major
challenge to minimize procedural complications and optimize stent
delivery, expansion and apposition for best PCI outcomes. The
Diamondback 360® Coronary OAS uses a powerful dual mechanism of
action to treat both superficial and deep calcium.
Scott Ward, Chairman, President and Chief Executive Officer,
said, “This study expands our evidence demonstrating the safe,
effective use of orbital atherectomy to treat a real-world complex
patient population. With 11 studies tracking over 2200 patients to
date, CSI continues to extend its leadership in the development of
medical evidence for the treatment of patients with severe coronary
artery disease.”
Please visit TCT Conference Hub - CSII to find information on
all CSI activities at TCT Connect 2020.
1 Orbital Atherectomy System for Treating De Novo, Severely
Calcified Coronary Lesions: A Tertiary Center Experience. Authors
Nirat Beohar, MD, Juan M. Vinardell, MD, Carlos Podesta, MD, Nafees
Mohammed, MD, Todd Heimowitz, DO, Christian Koelbl, MD PhD, Helen
Parise, PhD and Ajay Kirtane, MD SM.
Conference Call Scheduled for Today at 3:30 p.m. CT (4:30
p.m. ET) CSI will host a live conference call and webcast of
its fiscal first-quarter results today, November 4, 2020, at 3:30
p.m. CT (4:30 p.m. ET). To participate in the conference call,
please register online prior to the event:
http://www.directeventreg.com/registration/event/6292177. To access
the live webcast, go to the events section of CSI’s investor
relations website,
https://investors.csi360.com/events-and-presentations/events-calendar/default.aspx,
on the day of the conference, and click on the webcast link. A
webcast replay will be available beginning at 6:30 p.m. CT the same
day.
About Peripheral Artery Disease (PAD) As many as 18
million Americans, most over age 65, suffer from PAD, which is
caused by the accumulation of plaque in peripheral arteries
reducing blood flow. Symptoms include leg pain when walking or at
rest. Left untreated, PAD can lead to severe pain, immobility,
non-healing wounds and eventually limb amputation. With risk
factors such as diabetes and obesity on the rise, the prevalence of
PAD is growing at double-digit rates.
Millions of patients with PAD may benefit from treatment with
orbital atherectomy utilizing the Stealth 360® and Diamondback 360®
Peripheral Orbital Atherectomy Systems, minimally invasive catheter
systems developed and manufactured by CSI. These systems use a
diamond-coated crown, attached to an orbiting shaft, which sands
away plaque while preserving healthy vessel tissue — a critical
factor in preventing reoccurrences. Balloon angioplasty and stents
have significant shortcomings in treating hard, calcified lesions.
Stents are prone to fractures and high recurrence rates, and
treatment of hard, calcified lesions often leads to vessel damage
and suboptimal results.
About Coronary Artery Disease (CAD) CAD is a
life-threatening condition and a leading cause of death in men and
women in the United States. CAD occurs when a fatty material called
plaque builds up on the walls of arteries that supply blood to the
heart. The plaque buildup causes the arteries to harden and narrow
(atherosclerosis), reducing blood flow. The risk of CAD increases
if a person has one or more of the following: high blood pressure,
abnormal cholesterol levels, diabetes, or family history of early
heart disease. According to the American Heart Association, 16.3
million people in the United States have been diagnosed with CAD,
the most common form of heart disease. Heart disease claims more
than 600,000 lives in the United States each year. According to
estimates, significant arterial calcium is present in nearly 40% of
patients undergoing a percutaneous coronary intervention (PCI).
Significant calcium contributes to poor outcomes and higher
treatment costs in coronary interventions when traditional
therapies are used, including a significantly higher occurrence of
death and major adverse cardiac events (MACE).
About Cardiovascular Systems, Inc. Cardiovascular
Systems, Inc., based in St. Paul, Minn., is a medical device
company focused on developing and commercializing innovative
solutions for treating vascular and coronary disease. The company’s
orbital atherectomy system treats calcified and fibrotic plaque in
arterial vessels throughout the leg and heart and addresses many of
the limitations associated with existing surgical, catheter and
pharmacological treatment alternatives. For additional information,
please visit www.csi360.com and connect on Twitter @csi360.
Safe Harbor Certain statements in this news release are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and are provided under the
protection of the safe harbor for forward-looking statements
provided by that Act. For example, statements in this press release
regarding (i) CSI’s strategy and goals; (ii) management of CSI’s
business during the pandemic and the ongoing impact of the
pandemic; and (iii) anticipated revenue, gross profit, operating
expenses, 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 pendency and impact of the
COVID-19 outbreak, 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
OrbusNeich to successfully launch CSI products outside of the
United States and Japan; our ability to maintain third-party
supplier relationships and renew existing purchase agreements; our
ability to maintain our relationship with our distribution partner
in Japan and with OrbusNeich; the experience of physicians
regarding the effectiveness and reliability of the products we
sell; the reluctance of physicians, hospitals and other
organizations to accept new products; the potential for
unanticipated delays in enrolling medical centers and patients for
clinical trials; actual clinical trial and study results; the
impact of competitive products and pricing; unanticipated
developments affecting our estimates regarding expenses, future
revenues and capital requirements; the difficulty of successfully
managing operating costs; our ability to manage our sales force
strategy; our actual research and development efforts and needs,
including the timing of product development programs; our ability
to obtain and maintain intellectual property protection for product
candidates; our actual financial resources and our ability to
obtain additional financing; fluctuations in results and expenses
based on new product introductions, sales mix, unanticipated
warranty claims, and the timing of project expenditures; our
ability to manage costs; investigations or litigation threatened or
initiated against us; court rulings and future actions by the FDA
and other regulatory bodies; the effects of hurricanes, flooding,
and other natural disasters on our business; the impact of federal
corporate tax reform on our business, operations and financial
statements; international trade developments; shutdowns of the U.S.
federal government; general economic conditions; unanticipated
developments during the manufacturing transfer process for the
WIRION system; the effectiveness of the WIRION system; the
potential impact of any future strategic transactions; and other
factors detailed from time to time in CSI’s SEC reports, including
its most recent annual report on Form 10-K and subsequent quarterly
reports on Form 10-Q. CSI encourages you to consider all of these
risks, uncertainties and other factors carefully in evaluating the
forward-looking statements contained in this release. As a result
of these matters, changes in facts, assumptions not being realized
or other circumstances, CSI's actual results may differ materially
from the expected results discussed in the forward-looking
statements contained in this release. The forward-looking
statements made in this release are made only as of the date of
this release, and CSI undertakes no obligation to update them to
reflect subsequent events or circumstances.
Product Disclosures:
Peripheral Products Indications: The Stealth 360® PAD
System and Diamondback 360® PAD System are percutaneous orbital
atherectomy systems (OAS) indicated for use as therapy in patients
with occlusive atherosclerotic disease in peripheral arteries and
stenotic material from artificial arteriovenous dialysis
fistulae.
Contraindications: The OAS are contraindicated for use in
coronary arteries, bypass grafts, stents or where thrombus or
dissections are present.
Warnings/Precautions: Although the incidence of adverse
events is rare, potential events that can occur with atherectomy
include: pain, hypotension, CVA/TIA, death, dissection,
perforation, distal embolization, thrombus formation, hematuria,
abrupt or acute vessel closure, or arterial spasm.
See the instructions for use for detailed information regarding
the procedure, indications, contraindications, warnings,
precautions, and potential adverse events. For further information
call CSI at 1-877-274-0901 and/or consult CSI’s website at
www.csi360.com.
Caution: Federal law (USA) restricts these devices to
sale by or on the order of a physician.
The Stealth 360® PAD System and Diamondback 360® PAD System
received FDA 510(k) clearance. The Stealth 360® PAD System is CE
Marked.
Coronary Product Indications: The Diamondback 360®
Coronary Orbital Atherectomy System (OAS) is a percutaneous orbital
atherectomy system indicated to facilitate stent delivery in
patients with coronary artery disease (CAD) who are acceptable
candidates for PTCA or stenting due to de novo, severely calcified
coronary artery lesions.
Contraindications: The OAS is contraindicated when the
ViperWire® guide wire cannot pass across the coronary lesion or the
target lesion is within a bypass graft or stent. The OAS is
contraindicated when the patient is not an appropriate candidate
for bypass surgery, angioplasty, or atherectomy therapy, or has
angiographic evidence of thrombus, or has only one open vessel, or
has angiographic evidence of significant dissection at the
treatment site and for women who are pregnant or children.
Warnings/Precautions: Performing treatment in excessively
tortuous vessels or bifurcations may result in vessel damage; The
OAS was only evaluated in severely calcified lesions, A temporary
pacing lead may be necessary when treating lesions in the right
coronary and circumflex arteries; On-site surgical back-up should
be included as a clinical consideration; Use in patients with an
ejection fraction (EF) of less than 25% has not been evaluated.
See the instructions for use for detailed information regarding
the procedure, indications, contraindications, warnings,
precautions, and potential adverse events. For further information
call CSI at 1-877-274-0901 and/or consult CSI’s website at
www.csi360.com.
Caution: Federal law (USA) restricts these devices to
sale by or on the order of a physician.
The Diamondback 360® Coronary OAS is FDA PMA approved.
Cardiovascular Systems,
Inc.
Consolidated Statements of
Operations
(Dollars in Thousands)
(unaudited)
Three Months Ended
September 30
2020
2019
Net revenues
$
60,544
$
64,490
Cost of goods sold
12,564
12,672
Gross profit
47,980
51,818
Expenses:
Selling, general and administrative
40,282
46,752
Research and development
9,052
10,765
Amortization of intangible assets
304
234
Total expenses
49,638
57,751
Loss from operations
(1,658
)
(5,933
)
Other (income) and expense, net
355
(191
)
Loss before income taxes
(2,013
)
(5,742
)
Provision for income taxes
63
38
Net loss
$
(2,076
)
$
(5,780
)
Basic and diluted earnings per share
$
(0.05
)
$
(0.17
)
Basic and diluted weighted average shares
outstanding
38,683,839
33,870,224
Cardiovascular Systems,
Inc.
Consolidated Balance
Sheets
(Dollars in Thousands)
(unaudited)
September 30,
June 30,
2020
2020
ASSETS
Current assets
Cash and cash equivalents
$
92,671
$
185,463
Marketable securities
130,266
46,691
Accounts receivable, net
29,973
25,212
Inventories
29,152
27,706
Prepaid expenses and other current
assets
3,369
2,617
Total current assets
285,431
287,689
Property and equipment, net
28,232
27,810
Intangible assets, net
16,302
16,606
Other assets
11,758
7,414
Total assets
$
341,723
$
339,519
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
13,419
$
11,539
Accrued expenses
30,192
31,100
Deferred revenue
2,091
1,867
Total current liabilities
45,702
44,506
Long-term liabilities
Financing obligation
20,767
20,818
Deferred revenue
4,100
4,707
Other liabilities
2,749
696
Total liabilities
73,318
70,727
Commitments and contingencies
—
—
Total stockholders’ equity
268,405
268,792
Total liabilities and stockholders’
equity
$
341,723
$
339,519
Non-GAAP Financial Measures To supplement CSI's
consolidated condensed financial statements prepared in accordance
with GAAP, CSI uses a non-GAAP financial measure referred to as
"Adjusted EBITDA" in this release.
Reconciliations of this non-GAAP measure to the most comparable
U.S. GAAP measure for the respective periods can be found in the
following tables. In addition, an explanation of the manner in
which CSI's management uses this measure to conduct and evaluate
its business, the economic substance behind management's decision
to use this measure, the substantive reasons why management
believes that this measure provides useful information to
investors, the material limitations associated with the use of this
measure and the manner in which management compensates for those
limitations is included following the reconciliation table.
Adjusted EBITDA
(Dollars in Thousands)
(unaudited)
Three Months Ended
September 30
2020
2019
Net loss
$
(2,076
)
$
(5,780
)
Less: Other (income) and expense, net
355
(191
)
Less: Provision for income taxes
63
38
Loss from operations
(1,658
)
(5,933
)
Add: Stock-based compensation
4,907
3,906
Add: Depreciation and amortization
1,029
974
Adjusted EBITDA
$
4,278
$
(1,053
)
Use and Economic Substance of Non-GAAP Financial Measures
Used by CSI and Usefulness of Such Non-GAAP Financial Measures to
Investors CSI uses Adjusted EBITDA as a supplemental measure of
performance and believes this measure facilitates operating
performance comparisons from period to period and company to
company by factoring out potential differences caused by
depreciation and amortization expense and stock based compensation.
CSI's management uses Adjusted EBITDA to analyze the underlying
trends in CSI's business, assess the performance of CSI's core
operations, establish operational goals and forecasts that are used
to allocate resources and evaluate CSI's performance period over
period and in relation to its competitors' operating results.
Additionally, CSI's management is evaluated on the basis of
Adjusted EBITDA when determining achievement of their incentive
compensation performance targets.
CSI believes that presenting Adjusted EBITDA provides investors
greater transparency to the information used by CSI's management
for its financial and operational decision-making and allows
investors to see CSI's results "through the eyes" of management.
CSI also believes that providing this information better enables
CSI's investors to understand CSI's operating performance and
evaluate the methodology used by CSI's management to evaluate and
measure such performance.
The following is an explanation of each of the items that
management excluded from Adjusted EBITDA and the reasons for
excluding each of these individual items:
-- Stock-based compensation. CSI excludes stock-based
compensation expense from its non-GAAP financial measures primarily
because such expense, while constituting an ongoing and recurring
expense, is not an expense that requires cash settlement. CSI's
management also believes that excluding this item from CSI's
non-GAAP results is useful to investors to understand the
application of stock-based compensation guidance and its impact on
CSI's operational performance, liquidity and its ability to make
additional investments in the company, and it allows for greater
transparency to certain line items in CSI's financial
statements.
-- Depreciation and amortization expense. CSI excludes
depreciation and amortization expense from its non-GAAP financial
measures primarily because such expenses, while constituting
ongoing and recurring expenses, are not expenses that require cash
settlement and are not used by CSI's management to assess the core
profitability of CSI's business operations. CSI's management also
believes that excluding these items from CSI's non-GAAP results is
useful to investors to understand CSI's operational performance,
liquidity and its ability to make additional investments in the
company.
Material Limitations Associated with the Use of Non-GAAP
Financial Measures and Manner in which CSI Compensates for these
Limitations
Non-GAAP financial measures have limitations as analytical tools
and should not be considered in isolation or as a substitute for
CSI's financial results prepared in accordance with GAAP. Some of
the limitations associated with CSI's use of these non-GAAP
financial measures are:
-- Items such as stock-based compensation do not directly affect
CSI's cash flow position; however, such items reflect economic
costs to CSI and are not reflected in CSI's "Adjusted EBITDA" and
therefore these non-GAAP measures do not reflect the full economic
effect of these items.
-- Non-GAAP financial measures are not based on any
comprehensive set of accounting rules or principles and therefore
other companies may calculate similarly titled non-GAAP financial
measures differently than CSI, limiting the usefulness of those
measures for comparative purposes.
-- CSI's management exercises judgment in determining which
types of charges or other items should be excluded from the
non-GAAP financial measures CSI uses. CSI compensates for these
limitations by relying primarily upon its GAAP results and using
non-GAAP financial measures only supplementally. CSI provides full
disclosure of each non-GAAP financial measure.
-- CSI provides detailed reconciliations of each non-GAAP
measure to its most directly comparable GAAP measure. CSI
encourages investors to review these reconciliations. CSI qualifies
its use of non-GAAP financial measures with cautionary statements
as set forth above.
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version on businesswire.com: https://www.businesswire.com/news/home/20201104005535/en/
Cardiovascular Systems, Inc. Jack Nielsen (651) 202-4919
j.nielsen@csi360.com
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