Conference Call Scheduled for Today, November 3, 2010 at 3:45 PM CT
(4:45 PM ET)
ST. PAUL, Minn., Nov 03, 2010 (BUSINESS WIRE) --
Cardiovascular Systems, Inc. (CSI) (Nasdaq: CSII):
- Financial performance improved significantly over prior year's
first quarter
- Revenue increased 20 percent to $18.2 million
- Operating expenses remained consistent with prior-year levels
- Adjusted EBITDA loss improved 51 percent to $(1.7) million
- Net loss improved 31 percent to $(4.3) million, or $(0.28) per
share
- Scientific evidence continues to build, with over 1,700 patients
studied
- Over 33,000 patients have been treated to date
Cardiovascular Systems, Inc. (CSI) (Nasdaq: CSII), a medical device
company developing and commercializing innovative interventional
treatment systems for vascular disease, today reported financial results
for its fiscal first quarter ended September 30, 2010.
CSI's revenue in the first quarter rose to $18.2 million, a 20 percent
gain over revenue of $15.2 million in the first quarter of last fiscal
year. Adjusted EBITDA, calculated as loss from operations, less
depreciation and amortization and stock-based compensation expense,
improved by 51percent to a loss of $(1.7) million, as a result
of stronger revenue and minimal operating expense growth.
Net loss was $(4.3) million for the quarter, a 31 percent improvement
over a $(6.2) million net loss in the first quarter of last year. Net
loss per common share was $(0.28) in the fiscal 2011 first quarter,
compared to $(0.43) per common share a year earlier.
David L. Martin, CSI president and chief executive officer, said, "We
continued our quarterly progress toward profitability. Our primary goals
are profitability and positive cash flow, proliferation of the
Diamondback 360(R) as the first-line treatment for peripheral
arterial disease, and approval of a coronary application for the
Diamondback System."
Revenue generated from customer reorders rose to 95 percent of total
revenue for the fiscal 2011 first quarter, up from 92 percent in last
year's first quarter. Gross margin at 77 percent was consistent with the
same period last year, and in line with CSI's expectations. Operating
efficiencies and cost management held operating expenses to only a 2
percent increase at $17.9 million, including $500,000 of net expenses
related to a legal settlement with ev3.
OPERATING HIGHLIGHTS
PAD Clinical Studies Continue to Progress
At a scientific symposium in September, data from three CSI peripheral
arterial disease (PAD) clinical studies reinforced the advantages of the
Diamondback 360°. These studies - CALCIUM 360°, CONFIRM Diamondback and
CLEAR 360° - added to CSI's unprecedented wealth of scientific data
demonstrating the superior safety, efficacy and cost effectiveness of
the Diamondback 360° System. In 10 studies to date, over 1,700 patients
have been studied by 250 physicians in 220 hospitals. Many of these
patients are the most difficult to treat and would have been excluded
from other studies due to the severity of their conditions, including
lesions with calcified plaque and disease in small arterial vessels.
Some key findings from these studies include:
-
Excellent Safety - CSI's studies show extremely low rates of
perforations (0.6 percent), bailout stenting (2.3 percent) and
mortality (<0.1 percent).
-
Long-term Efficacy - The OASIS study results demonstrate very low
lesion retreatment rates of 2.4 percent at six months and 13.6 percent
at 24 months.
According to Martin, "Two minutes of treatment routinely removes decades
of arterial plaque buildup. The Diamondback 360° offers patients a
minimally invasive solution to a life-threatening disease. Our
scientific studies feature patient types previously unstudied, including
patients scheduled for amputation, patients with widespread PAD, and
patients with hard calcified plaque. Additionally, we are the only
company with a product that routinely treats small vessels, which are
critical to providing blood flow to the foot."
Enrollment Proceeding for Coronary Pivotal Trial
In April, CSI received FDA unconditional Investigational Device
Exemption (IDE) approval for its ORBIT II trial to evaluate the safety
and effectiveness of the Diamondback 360° to treat calcified coronary
lesions. ORBIT II is expected to enroll 429 patients, subject to FDA
review of data from the first 50 cases. CSI expects to complete
enrollment of the first 50 patients by the end of this calendar year.
CSI's unique orbital technology has a successful track record in
treating small vessels with calcified lesions and may be well suited for
a coronary application, potentially sparing many patients from highly
invasive surgery, while improving long-term outcomes. The ORBIT I
coronary feasibility trial provided strong safety and efficacy data, and
CSI believes it will be able to repeat those outcomes in ORBIT II.
Second-Generation PAD System Introduced
In July, CSI introduced the Diamondback Predator 360(R) PAD
System, a second-generation product - with improved crowns and shafts -
that uses the same mechanism of action as the Diamondback 360°. With the
Diamondback Predator 360°, physicians can remove a high percentage of
plaque in less time and easily advance through difficult occlusions.
Martin continued, "Physicians are asking for fast, safe and easy-to-use
PAD products. Patients are asking to be mobile and pain free, and to
avoid retreatment. We are committed to meeting all these needs for
patients and their doctors."
Fiscal 2011 Second-Quarter Outlook
For the fiscal 2011 second quarter ending December 31, 2010, CSI
management anticipates:
-
Revenue in the range of $18.5 million to $19.5 million, or growth of
23 percent to 29 percent over the second quarter of fiscal 2010;
-
Gross profit as a percentage of revenue at approximately the same
level as the fiscal 2011 first quarter;
-
Total operating expenses similar to the fiscal 2011 first quarter,
excluding the $500,000 net expense for the settlement of the ev3
lawsuit in the first quarter of this fiscal year;
-
Net loss in the range of $(2.7) million to $(3.3) million, or loss per
common share ranging from $(0.17) to $(0.21), assuming 15.7 million
average shares outstanding; and
-
Adjusted EBITDA loss between $(0.1) million and $(0.7) million.
Management continues to balance growth with progress toward
profitability and positive cash flow, and expects the net loss and
adjusted EBITDA to improve as revenue increases.
Conference Call Today at 3:45 PM CT (4:45 PM ET)
Cardiovascular Systems, Inc. will host a live conference call and
webcast of its fiscal first-quarter results today, November 3, 2010, at
3:45 p.m. CT (4:45 p.m. ET). To access the call, dial (888) 713-4213 and
enter access number 71223045. Please dial in at least 10 minutes prior
to the call and wait for operator assistance. To listen to the live
webcast, go to the investor information section of the company's
website, www.csi360.com,
and click on the webcast icon. A webcast replay will be available
beginning at 7 p.m. CT the same day.
For an audio replay of the conference call, dial (888) 286-8010 and
enter access number 84340989. The audio replay will be available
beginning at 8 p.m. CT on Wednesday, November 3, 2010, through 6 p.m. CT
on Friday, November 5, 2010.
Use of Non-GAAP Financial Measures
To 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 Cardiovascular Systems, Inc.
Cardiovascular Systems, Inc., based in St. Paul, Minn., is a medical
device company focused on developing and commercializing interventional
treatment systems for vascular disease. The company's Diamondback 360(R)
and Diamondback Predator 360(R) PAD Systems treat calcified and
fibrotic plaque in arterial vessels throughout the leg in a few minutes
of treatment time, and address many of the limitations associated with
existing surgical, catheter and pharmacological treatment alternatives.
As many as 12 million Americans suffer from peripheral arterial disease
(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, and can lead to tissue loss
and eventually limb amputation. In August 2007, the U.S. FDA granted
510(k) clearance for the use of the Diamondback 360° as a therapy for
PAD, and CSI commenced a U.S. product launch in September 2007. Since
then, more than 33,000 procedures have been performed using the
Diamondback 360° in leading institutions across the United States. For
more information visit the company's Web site at www.csi360.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 future profitability; (ii) the
use of the Diamondback 360° to treat coronary lesions; (iii) CSI's
clinical trials; (iv) anticipated revenue, gross profit, operating
expenses, net loss and adjusted EBITDA in future periods; and (v)
management's expectation that net loss and adjusted EBITDA will improve
as revenue increases, are forward-looking statements. These statements
involve risks and uncertainties which could cause results to differ
materially from those projected, including but not limited to the
potential for unanticipated delays in enrolling medical centers and
patients for clinical trials; dependence on market growth; the
reluctance of physicians to accept new products; the impact of
competitive products and pricing; the difficulty to successfully manage
operating costs; fluctuations in quarterly results; approval of products
for reimbursement and the level of reimbursement; 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 Disclosure
The Diamondback 360(R) PAD System and Diamondback Predator 360(R)
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.
|
|
Cardiovascular Systems, Inc.
|
|
Consolidated Statements of Operations
|
|
(Dollars in Thousands, except per share and share amounts)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
September 30,
|
|
|
|
2010 |
|
|
2009 |
|
Revenues
|
|
|
$
|
18,165
|
|
|
|
$
|
15,198
|
|
|
Cost of goods sold
|
|
|
|
4,141 |
|
|
|
|
3,488 |
|
|
Gross profit
|
|
|
|
14,024 |
|
|
|
|
11,710 |
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
15,496
|
|
|
|
|
14,856
|
|
|
Research and development
|
|
|
|
2,422 |
|
|
|
|
2,781 |
|
|
Total expenses
|
|
|
|
17,918 |
|
|
|
|
17,637 |
|
|
Loss from operations
|
|
|
|
(3,894 |
) |
|
|
|
(5,927 |
) |
|
Other income (expense):
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
(365
|
)
|
|
|
|
(371
|
)
|
|
Interest income
|
|
|
|
7
|
|
|
|
|
98
|
|
|
Other
|
|
|
|
(16 |
) |
|
|
|
-- |
|
|
Total other expense
|
|
|
|
(374 |
) |
|
|
|
(273 |
) |
|
Net loss
|
|
|
$ |
(4,268 |
) |
|
|
$ |
(6,200 |
) |
|
Net loss per common share:
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
$ |
(0.28 |
) |
|
|
$ |
(0.43 |
) |
|
Weighted average common shares
|
|
|
|
|
|
|
|
used in computation:
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
15,369,157 |
|
|
|
|
14,516,843 |
|
|
|
|
|
|
|
|
| Stock-based compensation supplemental detail (included in amounts
above): |
|
Cost of goods sold
|
|
|
$
|
277
|
|
|
|
$
|
129
|
|
|
Selling, general and administrative
|
|
|
|
1,397
|
|
|
|
|
1,811
|
|
|
Research and development
|
|
|
|
315 |
|
|
|
|
281 |
|
|
Totals
|
|
|
$ |
1,989 |
|
|
|
$ |
2,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
|
Consolidated Balance Sheets
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
June 30, |
|
|
|
2010 |
|
|
2010 |
| ASSETS |
|
Current assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
22,006
|
|
|
$
|
23,717
|
|
Accounts receivable, net
|
|
|
|
10,579
|
|
|
|
9,394
|
|
Inventories
|
|
|
|
4,456
|
|
|
|
4,319
|
|
Prepaid expenses and other current assets
|
|
|
|
1,448 |
|
|
|
1,048 |
|
Total current assets
|
|
|
|
38,489 |
|
|
|
38,478 |
|
Property and equipment, net
|
|
|
|
2,015
|
|
|
|
1,964
|
|
Patents, net
|
|
|
|
1,817
|
|
|
|
1,712
|
|
Other assets
|
|
|
|
106 |
|
|
|
180 |
|
Total assets
|
|
|
$ |
42,427 |
|
|
$ |
42,334 |
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
Current liabilities
|
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
$
|
4,600
|
|
|
$
|
3,613
|
|
Accounts payable
|
|
|
|
5,038
|
|
|
|
3,353
|
|
Deferred grant incentive
|
|
|
|
1,535
|
|
|
|
1,181
|
|
Accrued expenses
|
|
|
|
6,869 |
|
|
|
6,569 |
|
Total current liabilities
|
|
|
|
18,042 |
|
|
|
14,716 |
|
Long-term liabilities
|
|
|
|
|
|
|
|
Long-term debt, net of current maturities
|
|
|
|
6,366
|
|
|
|
7,286
|
|
Deferred grant incentive
|
|
|
|
2,218
|
|
|
|
2,208
|
|
Other liabilities
|
|
|
|
365 |
|
|
|
409 |
|
Total long-term liabilities
|
|
|
|
8,949 |
|
|
|
9,903 |
|
Total liabilities
|
|
|
|
26,991 |
|
|
|
24,619 |
|
Commitments and contingencies
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
|
15,436 |
|
|
|
17,715 |
|
Total liabilities and stockholders' equity
|
|
|
$ |
42,427 |
|
|
$ |
42,334 |
|
|
|
|
|
|
|
|
|
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 Adjusted EBITDA to the most comparable U.S. GAAP
measure for the respective periods can be found in the table below. 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 below.
|
|
Cardiovascular Systems, Inc.
|
|
Supplemental Sales Information
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
Three months ended |
|
|
|
September 30, |
|
|
|
2010 |
|
|
2009 |
|
|
|
|
|
|
|
|
Device revenue
|
|
|
$16,063
|
|
|
|
$13,640
|
|
|
Other product revenue
|
|
|
2,102
|
|
|
|
1,558
|
|
|
Total revenue
|
|
|
$18,165
|
|
|
|
$15,198
|
|
|
|
|
|
|
|
|
|
Device units sold
|
|
|
5,342
|
|
|
|
4,541
|
|
|
|
|
|
|
|
|
|
New customers
|
|
|
56
|
|
|
|
55
|
|
|
|
|
|
|
|
|
|
Reorder revenue %
|
|
|
95%
|
|
|
|
92%
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
|
Adjusted EBITDA
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Projected Range |
|
|
|
Three Months Ended |
|
|
Three Months Ending |
|
|
|
Sept. 30, |
|
|
Dec. 31, 2010 |
|
|
|
2010 |
|
|
2009 |
|
|
High |
|
|
Low |
|
Loss from operations
|
|
|
$
|
(3,894
|
)
|
|
|
$
|
(5,927
|
)
|
|
|
$
|
(2,300
|
)
|
|
|
$
|
(2,900
|
)
|
|
Add: Stock-based
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
compensation
|
|
|
|
1,989
|
|
|
|
|
2,221
|
|
|
|
|
2,000
|
|
|
|
|
2,000
|
|
|
Add: Depreciation and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amortization
|
|
|
|
164
|
|
|
|
|
136
|
|
|
|
|
200
|
|
|
|
|
200
|
|
|
Adjusted EBITDA
|
|
|
$
|
(1,741
|
)
|
|
|
$
|
(3,570
|
)
|
|
|
$
|
(100
|
)
|
|
|
$
|
(700
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 non-cash
charges such as stock-based compensation. CSI's management uses Adjusted
EBITDA to analyze the underlying trends in CSI's business, assess the
performance of CSI's core operations, establish operational goals and
forecasts that are used to allocate resources and evaluate CSI's
performance period over period and in relation to its competitors'
operating results. Additionally, CSI's management is evaluated on the
basis of Adjusted EBITDA when determining achievement of their incentive
compensation performance targets.
CSI believes that presenting Adjusted EBITDA provides investors greater
transparency to the information used by CSI's management for its
financial and operational decision-making and allows investors to see
CSI's results "through the eyes" of management. CSI also believes that
providing this information better enables CSI's investors to understand
CSI's operating performance and evaluate the methodology used by CSI's
management to evaluate and measure such performance.
The following is an explanation of each of the items that management
excluded from Adjusted EBITDA and the reasons for excluding each of
these individual items:
-- Stock-based compensation. CSI excludes stock-based compensation
expense from its non-GAAP financial measures primarily because such
expense, while constituting an ongoing and recurring expense, is not an
expense that requires cash settlement. CSI's management also believes
that excluding this item from CSI's non-GAAP results is useful to
investors to understand the application of stock-based compensation
guidance and its impact on CSI's operational performance, liquidity and
its ability to make additional investments in the company, and it allows
for greater transparency to certain line items in CSI's financial
statements.
-- Depreciation and amortization expense. CSI excludes depreciation and
amortization expense from its non-GAAP financial measures primarily
because such expenses, while constituting ongoing and recurring
expenses, are not expenses that require cash settlement and are not used
by CSI's management to assess the core profitability of CSI's business
operations. CSI's management also believes that excluding these items
from CSI's non-GAAP results is useful to investors to understand CSI's
operational performance, liquidity and its ability to make additional
investments in the company.
Material Limitations Associated with the Use of Non-GAAP Financial
Measures and Manner in which CSI Compensates for these 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 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.
SOURCE: Cardiovascular Systems, Inc.
Cardiovascular Systems, Inc.
Investor Relations, 651-259-2800
investorrelations@csi360.com
or
Padilla Speer Beardsley Inc.
Marian Briggs, 612-455-1742
mbriggs@psbpr.com
or
Nancy A. Johnson, 612-455-1745
njohnson@psbpr.com