ST. PAUL, Minn.--(BUSINESS WIRE)--
Cardiovascular Systems, Inc. (NASDAQ: CSII):
Conference Call Scheduled for Today, May 3, 2017, at 3:45 PM CT (4:45
PM ET)
-
Revenues of $52.1 million grew 17% compared to third quarter last
year
-
Net loss was $(1.7) million, or $(0.05) per share
-
Includes $1.5 million charge related to voluntary recall of
Saline Infusion Pumps and $1.3 million charge related to employee
lawsuit
-
Cash position grew $23.9 million to $103.1 million
-
Diamondback 360® Coronary Orbital Atherectomy
System (OAS) Micro Crown approved in Japan and US
-
First subject enrolled in ECLIPSE coronary clinical trial
Cardiovascular Systems, Inc. (CSI) (NASDAQ: CSII), a medical device
company developing and commercializing innovative interventional
treatment systems for peripheral and coronary artery disease, today
reported financial results for its fiscal third quarter ended March 31,
2017.
The company’s third-quarter revenues were $52.1 million, a 17% increase
from the third quarter of fiscal 2016. Coronary revenues grew 28% over
last year, while peripheral revenues increased 14%.
The third-quarter gross profit margin decreased to 78.6% from 80.4% in
the prior-year period. Gross margin was lower than anticipated due to a
charge to cover the costs associated with the previously announced
voluntary recall and replacement of the company’s 7-10014 Saline
Infusion Pump. The $1.5 million charge reduced gross margin by
approximately 2.9 percentage points.
Operating expenses in the third quarter were 27% lower than the prior
year. The current quarter includes a $1.3 million net charge related to
a potential loss from a previously disclosed and pending employee
lawsuit, while the prior-year quarter includes $12.4 million of one-time
costs. The remaining operating expenses declined $4.6 million, or 10%,
reflecting management’s cost realignment initiatives and timing of
studies and programs.
Third-quarter net loss was $(1.7) million, or $(0.05) per share,
improving $21.0 million from a net loss of $(22.7) million, or $(0.69)
per share in the prior-year period. Adjusted EBITDA was positive in the
quarter at $1.7 million. Cash increased $23.9 million for the quarter,
primarily due to net proceeds of $20.9 million from the sale and
leaseback of the company’s headquarters and the generation of $2.7
million of cash from operations.
Scott Ward, CSI’s Chairman, President and Chief Executive Officer, said,
“CSI delivered a strong quarter, with attractive growth in both our
coronary and peripheral franchises. In addition, we have improved CSI’s
financial condition by increasing our cash balance through the sale and
leaseback of our corporate headquarters and by securing a $40.0 million
line of credit.”
Diamondback 360® Coronary OAS Micro Crown
Approved in Japan and US
In March, CSI announced that
Japan’s Ministry of Health, Labor and Welfare approved the Diamondback
360® Coronary OAS Micro Crown as a frontline treatment for de
novo severely calcified lesions and to facilitate access to the
arteries for percutaneous coronary interventions (PCI) thereafter.
Commercial launch is expected in Japan in the first half of calendar
2018.
“We are excited to receive this landmark approval, which furthers our
mission to provide solutions for the treatment of calcified artery
disease and facilitates our first international expansion,” said Ward.
“Japan represents an attractive market opportunity as the world’s
second-largest market for coronary interventions with over 280,000 PCIs
per year, of which 10%-20% are estimated to be severely calcified. We
look forward to working with Medikit, Co., Ltd., our exclusive
distribution partner with a large sales force in Japan, to pursue this
significant opportunity.”
Also in March, CSI announced that the United States Food and Drug
Administration approved the Diamondback 360® Coronary OAS
Micro Crown to facilitate stent delivery in patients with coronary
artery disease (CAD) who are acceptable candidates for percutaneous
transluminal coronary angioplasty or stenting due to de novo,
severely calcified coronary artery lesions. The OAS Micro Crown will
supplement the existing OAS Classic Crown in the United States for
treatment of tight, severely calcified lesions that would otherwise be
difficult to access. A limited market launch is expected to begin in the
U.S. later in calendar 2017.
First Subject Enrolled in ECLIPSE Coronary Atherectomy Trial
In
March, CSI, in partnership with Cardiovascular Research Foundation,
announced the first subject enrolled in its ECLIPSE clinical trial. The
subject was treated by Dr. Richard Shlofmitz, interventional
cardiologist and the Director of the Department of Cardiology at St.
Francis Hospital, Roslyn, NY. Dr. Shlofmitz also treated subjects in
CSI’s ORBIT II and COAST clinical studies.
"Severely calcified coronary lesions have continued to grow in
complexity while treating coronary artery disease (CAD)," Dr. Shlofmitz
said. “The Diamondback 360® Coronary OAS provides a novel
treatment option for these patients compared to conventional
angioplasty. Definitive data from the ECLIPSE clinical trial will guide
my treatment approach for these difficult-to-treat patients."
ECLIPSE is a prospective, multi-center, randomized clinical trial of
approximately 2,000 subjects with severely calcified coronary lesions
in the United States. Half the participants will receive orbital
atherectomy prior to DES implantation, while the other half will receive
conventional angioplasty, including specialty balloons, followed by DES
implantation. The trial is powered to demonstrate differences in the
primary endpoints of post-procedural minimal cross-sectional area
(assessed by intravascular imaging in a subset of up to 400 patients),
as well as in the clinical outcome of target vessel failure at one year.
ECLIPSE will also evaluate key health economic outcomes.
Fiscal 2017 Fourth-Quarter Outlook and Commentary
Ward said,
“The recall and replacement of affected Saline Infusion Pumps is
expected to be moderately disruptive to fourth-quarter results. Until
the recall is complete, limited pump availability will temper new
account openings. In addition, a portion of sales time will be dedicated
to facilitate the recall process and ensure that our affected customers
are appropriately serviced. Finally, some customers may reduce usage of
our OAS until their pumps are replaced. Our fourth-quarter guidance
reflects our current assessment of these factors.”
For the fiscal 2017 fourth quarter ending June 30, 2017, CSI anticipates:
-
Revenue in a range of $51.5 million to $52.5 million;
-
Gross profit as a percentage of revenues of about 81 percent;
-
Operating expenses of approximately $43.5 million;
-
Net loss in the range of $(2.0) million to $(1.4) million, or loss per
common share ranging from $(0.06) to $(0.04), assuming approximately
32.7 million average shares outstanding; and
-
Positive Adjusted EBITDA.
Conference Call Today at 3:45 p.m. CT (4:45 p.m. ET)
Cardiovascular
Systems, Inc. will host a live conference call and webcast of its fiscal
third-quarter results today, May 3, 2017, at 3:45 p.m. CT (4:45 p.m.
ET). To access the call, dial (877) 201-0168 and enter the access number
4070160. Please dial in at least 10 minutes prior to the call. To access
the live webcast, go to the events section of the company’s investor
relations website, http://investors.csi360.com/Investors/Events,
and click on the webcast link.
For an audio replay of the conference call, dial (800) 585-8367 and
enter 4070160. The audio replay will be available beginning at 6:45 p.m.
CT on Wednesday, May 3, 2107, through 10:59 p.m. CT on Wednesday, May
10, 2017.
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 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 Systems
treat calcified and fibrotic plaque in arterial vessels throughout the
leg and heart in a few minutes of treatment time, and address many of
the limitations associated with existing surgical, catheter and
pharmacological treatment alternatives. The U.S. FDA granted the first
510(k) clearance for the use of the Orbital Atherectomy System in
peripheral arteries in August 2007. In October 2013, the company
received FDA approval for the Coronary Orbital Atherectomy System. To
date, over 308,000 of CSI’s devices have been sold to leading
institutions across the United States. For more information, visit the
company’s website at www.csi360.com.
Safe 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) the anticipated
commercialization of the Diamondback 360 Coronary OAS Micro Crown in
Japan, including the anticipated timing thereof, and the significant
opportunity in Japan; (ii) the market launch of the OAS Micro Crown in
the U.S., including the anticipated timing thereof; (iii) the ECLIPSE
trial; (iv) the recall and replacement of Saline Infusion Pumps and the
expected impact thereof; and (vi) 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, regulatory developments in the U.S., Japan and other
foreign countries; FDA and similar Japanese and other foreign clearances
and approvals; approval of our products for distribution in Japan and
other foreign countries; 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; our ability to maintain our relationship with our distribution
partner in Japan; the experience of physicians regarding the
effectiveness and reliability of CSI’s products; the reluctance of
physicians, hospitals and other organizations to accept new products;
the potential for unanticipated delays in enrolling medical centers and
patients for clinical trials; actual clinical trial and study results;
the impact of competitive products and pricing; unanticipated
developments affecting our estimates regarding expenses, future revenues
and capital requirements; the difficulty of successfully managing
operating costs; our ability to manage our sales force strategy; our
actual research and development efforts and needs; 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; future actions by the FDA
and other regulatory bodies; CSI’s failure to adequately assess the
cause and effect of the issues with the pump that led to the recall; the
ability of CSI to adequately modify the pump design in order to prevent
the issues from happening in the future; FDA approval of future designs
and versions of the pump, including replacement pumps to be used in the
recall; the ability of CSI to obtain sufficient components from
suppliers to manufacture replacement pumps; the ability of CSI to
replace the affected pumps in a timely and effective manner; the
potential that CSI may subsequently discover additional pumps subject to
recall; customer reactions to the recall; the effect on CSI’s reputation
of the recall; the possibility that this recall could subject CSI to
claims or proceedings that may adversely impact its business and
financial condition; the challenge and appeal of pending employment
litigation; general economic conditions; and other factors detailed from
time to time in CSI’s SEC reports, including its most recent annual
report on Form 10-K and subsequent quarterly reports on Form 10-Q. CSI
encourages you to consider all of these risks, uncertainties and other
factors carefully in evaluating the forward-looking statements contained
in this release. As a result of these matters, changes in facts,
assumptions not being realized or other circumstances, CSI's actual
results may differ materially from the expected results discussed in the
forward-looking statements contained in this release. The
forward-looking statements made in this release are made only as of the
date of this release, and CSI undertakes no obligation to update them to
reflect subsequent events or circumstances.
Product Disclosures:
Peripheral Products
The Stealth 360® PAD System
and Diamondback 360® PAD System are percutaneous orbital
atherectomy systems indicated for use as therapy in patients with
occlusive atherosclerotic disease in peripheral arteries and stenotic
material from artificial arteriovenous dialysis fistulae. The systems
are contraindicated for use in coronary arteries, bypass grafts, stents
or where thrombus or dissections are present. Although the incidence of
adverse events is rare, potential events that can occur with atherectomy
include: pain, hypotension, CVA/TIA, death, dissection, perforation,
distal embolization, thrombus formation, hematuria, abrupt or acute
vessel closure, or arterial spasm.
Coronary 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
before performing Diamondback 360 Coronary OAS procedures for
detailed information regarding the procedure, indications,
contraindications, warnings, precautions, and potential adverse events.
For further information call CSI at 1-877-274-0901 and/or consult CSI’s
website at www.csi360.com.
Caution: Federal law (USA) restricts these devices to sale by or
on the order of a physician.
|
Cardiovascular Systems, Inc.
|
|
Consolidated Statements of Operations
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
|
$
|
52,144
|
|
|
$
|
44,461
|
|
|
$
|
151,987
|
|
|
$
|
129,724
|
|
|
Cost of goods sold
|
|
|
11,139
|
|
|
|
8,725
|
|
|
|
29,768
|
|
|
|
25,567
|
|
|
Gross profit
|
|
|
41,005
|
|
|
|
35,736
|
|
|
|
122,219
|
|
|
|
104,157
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
37,332
|
|
|
|
42,338
|
|
|
|
108,191
|
|
|
|
124,991
|
|
|
Research and development
|
|
|
5,432
|
|
|
|
5,748
|
|
|
|
16,572
|
|
|
|
19,895
|
|
|
Restructuring
|
|
─
|
|
|
|
2,376
|
|
|
─
|
|
|
|
2,376
|
|
|
Legal settlement
|
|
─
|
|
|
|
8,000
|
|
|
─
|
|
|
|
8,000
|
|
|
Total expenses
|
|
|
42,764
|
|
|
|
58,462
|
|
|
|
124,763
|
|
|
|
155,262
|
|
|
Loss from operations
|
|
|
(1,759
|
)
|
|
|
(22,726
|
)
|
|
|
(2,544
|
)
|
|
|
(51,105
|
)
|
|
Other (income) and expense, net
|
|
|
(28
|
)
|
|
|
(21
|
)
|
|
|
(46
|
)
|
|
|
(22
|
)
|
|
Loss before income taxes
|
|
|
(1,731
|
)
|
|
|
(22,705
|
)
|
|
|
(2,498
|
)
|
|
|
(51,083
|
)
|
|
Provision for income taxes
|
|
|
18
|
|
|
|
11
|
|
|
|
66
|
|
|
|
57
|
|
|
Net loss
|
|
$
|
(1,749
|
)
|
|
$
|
(22,716
|
)
|
|
$
|
(2,564
|
)
|
|
$
|
(51,140
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per share
|
|
$
|
(0.05
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(1.57
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
32,650,974
|
|
|
|
32,711,341
|
|
|
|
32,232,409
|
|
|
|
32,491,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
|
Consolidated Balance Sheets
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
June 30,
|
|
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
103,130
|
|
$
|
60,638
|
|
Accounts receivable, net
|
|
|
27,877
|
|
|
23,128
|
|
Inventories
|
|
|
16,605
|
|
|
17,440
|
|
Marketable securities
|
|
|
741
|
|
|
684
|
|
Prepaid expenses and other current assets
|
|
|
3,479
|
|
|
2,992
|
|
Total current assets
|
|
|
151,832
|
|
|
104,882
|
|
Property and equipment, net
|
|
|
30,213
|
|
|
32,471
|
|
Patents, net
|
|
|
4,752
|
|
|
5,013
|
|
Other assets
|
|
|
60
|
|
|
40
|
|
Total assets
|
|
$
|
186,857
|
|
$
|
142,406
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
|
$
|
8,813
|
|
$
|
8,506
|
|
Accrued expenses
|
|
|
29,837
|
|
|
26,993
|
|
Total current liabilities
|
|
|
38,650
|
|
|
35,499
|
|
Long-term liabilities
|
|
|
|
|
|
Finance obligation
|
|
|
20,973
|
|
─
|
|
Deferred revenue
|
|
|
10,000
|
|
─
|
|
Other liabilities
|
|
|
3,752
|
|
|
6,010
|
|
Total liabilities
|
|
|
73,375
|
|
|
41,509
|
|
Commitments and contingencies
|
|
|
|
|
|
Total stockholders' equity
|
|
|
113,482
|
|
|
100,897
|
|
Total liabilities and stockholders' equity
|
|
$
|
186,857
|
|
$
|
142,406
|
|
|
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
|
Supplemental Sales Information
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Device revenue
|
|
$
|
47,905
|
|
|
$
|
40,757
|
|
|
$
|
139,789
|
|
|
$
|
119,420
|
|
|
Other product revenue
|
|
|
4,239
|
|
|
|
3,704
|
|
|
|
12,198
|
|
|
|
10,304
|
|
|
Total revenue
|
|
$
|
52,144
|
|
|
$
|
44,461
|
|
|
$
|
151,987
|
|
|
$
|
129,724
|
|
|
|
|
|
|
|
|
|
|
|
|
PAD revenue
|
|
$
|
38,685
|
|
|
$
|
33,944
|
|
|
$
|
113,951
|
|
|
$
|
101,935
|
|
|
CAD revenue
|
|
|
13,459
|
|
|
|
10,517
|
|
|
|
38,036
|
|
|
|
27,789
|
|
|
Total revenue
|
|
$
|
52,144
|
|
|
$
|
44,461
|
|
|
$
|
151,987
|
|
|
$
|
129,724
|
|
|
|
|
|
|
|
|
|
|
|
|
New customers:
|
|
|
|
|
|
|
|
|
|
PAD
|
|
|
37
|
|
|
|
44
|
|
|
|
122
|
|
|
|
140
|
|
|
CAD
|
|
|
35
|
|
|
|
53
|
|
|
|
141
|
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorder revenue %
|
|
|
98
|
%
|
|
|
97
|
%
|
|
|
98
|
%
|
|
|
97
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Margin and Operating
Expenses, in each case adjusted to exclude certain charges or costs.
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
|
|
Nine Months Ended
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,749
|
)
|
|
$
|
(22,716
|
)
|
|
$
|
(2,564
|
)
|
|
$
|
(51,140
|
)
|
|
Less: Other (income) and expense, net
|
|
|
(28
|
)
|
|
|
(29
|
)
|
|
|
(46
|
)
|
|
|
(22
|
)
|
|
Less: Provision for income taxes
|
|
|
18
|
|
|
|
19
|
|
|
|
66
|
|
|
|
57
|
|
|
Loss from operations
|
|
|
(1,759
|
)
|
|
|
(22,726
|
)
|
|
|
(2,544
|
)
|
|
|
(51,105
|
)
|
|
Add: Stock-based compensation
|
|
|
2,403
|
|
|
|
3,173
|
|
|
|
8,336
|
|
|
|
10,392
|
|
|
Add: Depreciation and amortization
|
|
|
1,044
|
|
|
|
979
|
|
|
|
3,100
|
|
|
|
2,900
|
|
|
Adjusted EBITDA
|
|
$
|
1,688
|
|
|
$
|
(18,574
|
)
|
|
$
|
8,892
|
|
|
$
|
(37,813
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit and Gross Margin (Excluding Recall Charges)
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Gross profit
|
|
$
|
41,005
|
|
|
$
|
35,736
|
|
|
Less: Recall charges
|
|
|
1,505
|
|
|
─
|
|
|
Gross Profit (excluding recall charges)
|
|
$
|
42,510
|
|
|
$
|
35,736
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
78.6
|
%
|
|
|
80.4
|
%
|
|
Less: Recall charges as percentage of net revenues
|
|
|
2.9
|
%
|
|
─
|
|
|
Gross Margin (excluding recall charges)
|
|
|
81.5
|
%
|
|
|
80.4
|
%
|
|
|
|
|
|
|
|
|
Operating Expenses (Excluding One-Time Costs)
|
|
(Dollars in Thousands)
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
$
|
42,764
|
|
|
$
|
58,462
|
|
|
Less: Restructuring and severance
|
|
─
|
|
|
|
(4,406
|
)
|
|
Less: Litigation settlement
|
|
─
|
|
|
|
(8,000
|
)
|
|
Less: Employment litigation costs
|
|
|
(1,300
|
)
|
|
─
|
|
|
Operating Expenses (excluding one-time costs)
|
|
$
|
41,464
|
|
|
$
|
46,056
|
|
|
|
|
|
|
|
|
|
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.
In addition, CSI uses Gross Profit and Gross Margin, excluding recall
charges, and Operating Expenses, excluding one-time costs, in this
release. CSI excludes certain one-time charges and costs from these
items primarily because such expenses are not ongoing and recurring
expenses. CSI’s management believes that excluding these items 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 uses and detailed reconciliations of each non-GAAP measure to its
most directly comparable GAAP measure. CSI encourages investors to
review these reconciliations. CSI qualifies its use of non-GAAP
financial measures with cautionary statements as set forth above.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170503006342/en/
Source: Cardiovascular Systems, Inc.