Conference Call Scheduled for Today, May 6,
2021, at 3:30 PM CT (4:30 PM ET)
- Revenues of $63.3 million increased 3.4% compared to third
quarter last year
- Net loss of $6.0 million includes $3.4 million related to
acquisition of peripheral support catheters from WavePoint Medical,
LLC
- Management provides fiscal 2021 fourth quarter revenue
guidance of $67 million to $70 million, representing sequential
quarter revenue growth of 6% to 11%
- Journal of Medical Economics article demonstrates economic
benefits of orbital atherectomy
- Announced investment and acquisition option agreement with
CarePICS, LLC
- First patients treated with WIRION® embolic protection
system
- First patient in Europe treated with Diamondback 360®
Coronary OAS
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 third quarter, ended March 31, 2021.
Executive Commentary – Scott Ward, Chairman, President and
CEO
“We finished the third quarter on a strong note. The increase in
vaccinations and simultaneous decrease in Covid hospitalizations in
February and March resulted in improved procedure volumes during
the second half of the quarter.
“Third quarter revenues increased 3.4% to $63.3 million and were
led by our coronary franchise, due to strong procedure volume
domestically, increased sales of procedure support products, and
growing adoption of orbital atherectomy internationally. Peripheral
revenues were flat as patients with claudication continued to defer
evaluation and treatment. Office-based labs (OBLs) purchased nearly
one-half of our peripheral unit volume during the quarter
demonstrating that an increased number of complex peripheral
procedures were performed outside the hospital. Throughout the
pandemic, we have seen the OBL become another viable option for
complex procedures, which we expect to continue even as the
pandemic subsides.
“As we head into our fourth quarter, we believe the majority of
markets we serve have either returned to pre-Covid procedure levels
or are poised to do so in the very near future.
“As a result, the momentum that we built in the latter half of
the third quarter continued through early May and we are optimistic
that we will benefit from the continued growth in peripheral and
coronary procedure volumes throughout the rest of the fourth
quarter.
“The improvement in the state of the U.S. healthcare system
aligns well with the planned commercial launch of our peripheral
support devices later this month. The increasing ability of our
field sales organization to support cases and introduce these
products to our physicians is a core component of our growth
strategy going forward.”
Q3 Financial Highlights
CSI’s fiscal 2021 third-quarter revenues were $63.3 million,
representing an increase of $2.1 million, or 3.4%. Gross profit
margin was 77.9%.
Selling, general and administrative expenses were flat
year-over-year at $41.4 million. Research and development expenses
increased 32.1% to $13.2 million due to in-process research and
development (IPR&D) charges from the acquisition of a product
portfolio of peripheral microcatheters for $3.4 million.
Third-quarter net loss of $6.0 million, or $0.15 per basic and
diluted share, compared unfavorably to net loss of $2.9 million, or
$0.08 per basic and diluted share, in the prior-year period.
Adjusted EBITDA totaled $2.5 million, as compared to $1.6 million
in the prior year.
As of March 31, 2021, CSI had cash and marketable securities
totaling $211.1 million and no long-term borrowings.
Fiscal 2021 Fourth Quarter Guidance
For the fiscal 2021 fourth quarter ending June 30, 2021, CSI
anticipates:
- Revenue of $67 million to $70 million, representing sequential
revenue growth of 6% to 11% compared to the third quarter of fiscal
2021;
- Gross profit as a percentage of revenues in the 70% to 71%
range*;
- Operating expenses in a range of $53.5 million to $55.5
million;
- Net loss in a range of $6.0 to $7.0 million; and
- Adjusted EBITDA loss of $1.0 million to $2.0 million.
* Two factors will result in temporary lower gross margins
during Q4: 1. CSI will incur a one-time charge to cost of goods
sold related to the upgrade of saline pumps that will be reaching
end of service over the coming 24-36 months. 2. Throughout the
pandemic, CSI operated its production facilities to ensure adequate
safety stock. With pandemic conditions stabilizing, CSI will
temporarily reduce production during Q4 to restore normal inventory
levels. Combined, these factors are expected to result in gross
margin of approximately 70% to 71% during Q4.
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
third-quarter results today, May 6, 2021, at 3:30 p.m. CT (4:30
p.m. ET). To participate in the conference call, please register
here. To access the live webcast, click here. A webcast replay will
be available beginning at 6:30 p.m. CT the same day.
Journal of Medical Economics article
demonstrates economic benefits of orbital
atherectomy
As previously announced on May 3rd, a new article published in
the Journal of Medical Economics reviewed the two-year PAD-related
health care costs of patients enrolled in the LIBERTY 360°
trial.
Investment and acquisition option
agreement signed with telehealth company
As previously announced on April 8th, CSI completed a minority
investment and entered into an acquisition option agreement with
CarePICS, LLC, a telehealth company offering a virtual care
platform designed to improve the outcomes of patients suffering
from peripheral artery disease, critical limb ischemia and lower
extremity wounds.
Acquisition of peripheral support
catheters
As previously announced on March 22nd, CSI acquired a line of
peripheral support catheters from WavePoint Medical, LLC. As part
of the transaction, WavePoint will also develop a portfolio of
specialty catheters used in the treatment of chronic total
occlusions and complex percutaneous coronary intervention
procedures for CSI.
First uses of WIRION® embolic
protection system
As previously announced on March 17th, the first patients in the
U.S. were treated with the WIRION® Embolic Protection System.
First patient in Europe treated with
Diamondback 360® Coronary OAS
As previously announced on February 8th, the first patient in
Europe was treated with the Diamondback 360 Coronary Orbital
Atherectomy System.
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 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 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 about 30
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 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) our expectations regarding the OBL being a
viable option for complex procedures; (iii) the ongoing effects of,
and recovery from, the Covid pandemic; (iv) our optimism that we
will benefit from the continued growth in procedure volumes
throughout the fourth quarter; (v) anticipated product launches and
development; (vi) anticipated revenue, gross profit, operating
expenses, net loss and Adjusted EBITDA; and (vii) anticipated
upgrade of saline pumps and reduced production volumes, and the
impact thereof, 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 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; 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
Nine Months Ended
March 31
March 31
2021
2020
2021
2020
Net revenues
$
63,273
$
61,175
$
187,986
$
193,999
Cost of goods sold
14,013
12,225
40,497
38,615
Gross profit
49,260
48,950
147,489
155,384
Expenses:
Selling, general and administrative
41,442
41,384
121,785
135,003
Research and development
13,163
9,964
31,816
31,515
Amortization of intangible assets
304
337
912
908
Total expenses
54,909
51,685
154,513
167,426
Loss from operations
(5,649
)
(2,735
)
(7,024
)
(12,042
)
Other (income) and expense, net
292
107
923
(101
)
Loss before income taxes
(5,941
)
(2,842
)
(7,947
)
(11,941
)
Provision for income taxes
63
47
189
129
Net loss
$
(6,004
)
$
(2,889
)
$
(8,136
)
$
(12,070
)
Basic and diluted earnings per share
$
(0.15
)
$
(0.08
)
$
(0.21
)
$
(0.35
)
Basic and diluted weighted average shares
outstanding
38,911,454
34,149,561
38,800,622
34,029,296
Cardiovascular Systems,
Inc.
Consolidated Balance
Sheets
(Dollars in Thousands)
(unaudited)
March 31,
June 30,
2021
2020
ASSETS
Current assets
Cash and cash equivalents
$
75,333
$
185,463
Marketable securities
135,734
46,691
Accounts receivable, net
38,056
25,212
Inventories
33,367
27,706
Prepaid expenses and other current
assets
2,855
2,617
Total current assets
285,345
287,689
Property and equipment, net
28,157
27,810
Intangible assets, net
15,694
16,606
Other assets
17,739
7,414
Total assets
$
346,935
$
339,519
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
12,644
$
11,539
Accrued expenses
35,541
31,100
Deferred revenue
2,262
1,867
Total current liabilities
50,447
44,506
Long-term liabilities
Financing obligation
20,663
20,818
Deferred revenue
2,903
4,707
Other liabilities
2,471
696
Total liabilities
76,484
70,727
Commitments and contingencies
—
—
Total stockholders’ equity
270,451
268,792
Total liabilities and stockholders’
equity
$
346,935
$
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
Nine Months Ended
March 31
March 31
2021
2020
2021
2020
Net loss
$
(6,004
)
$
(2,889
)
$
(8,136
)
$
(12,070
)
Less: Other (income) and expense, net
292
107
923
(101
)
Less: Provision for income taxes
63
47
189
129
Loss from operations
(5,649
)
(2,735
)
(7,024
)
(12,042
)
Add: Stock-based compensation
3,704
3,273
12,488
10,469
Add: IPR&D charges incurred in
connection with asset acquisitions
3,353
—
3,353
—
Add: Depreciation and amortization
1,056
1,088
3,143
3,152
Adjusted EBITDA
$
2,464
$
1,626
$
11,960
$
1,579
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 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.
In addition, the Company now excludes the following item from
Adjusted EBITDA:
-- 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.
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/20210506005932/en/
Cardiovascular Systems, Inc. Jack Nielsen Vice President,
Investor Relations & Corporate Communications (651) 202-4919
j.nielsen@csi360.com
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