Conference Call Scheduled for Today,
November 9, 2021, at 8:00 AM CT (9:00 AM ET)
- Revenues of $58.4 million decreased 3.6% compared to first
quarter last year
- Procedure volumes adversely impacted by hospital constraints
and staffing shortages caused by the COVID-19 Delta
variant
- Management provides updated fiscal year 2022 revenue
guidance of $265 million to $285 million, representing 2% to 10%
growth
- First in human experience with everolimus coronary drug
coated balloon
- First patient treated with ViperCross™ peripheral support
catheter
- First patients in Canada 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 first quarter, ended September 30, 2021.
Executive Commentary – Scott Ward, Chairman, President and
CEO
“Our Q1 procedure volumes were adversely impacted primarily by
hospital capacity constraints caused by the COVID-19 Delta variant.
The resurgence of COVID-19 and the related staffing shortages
disrupted referral patterns and had the largest impact on our
procedures that are deemed to be more elective, such as the
treatment of lower acuity peripheral claudication.
“The severity and duration of the COVID-19 impact were greater
than expected and were more pronounced due to the timing and
geographic location of the Delta surge. Our procedure volumes in Q1
tend to be heavily weighted towards September, when ICU capacity
this year was severely constrained throughout the south and
southeast region of the U.S., which typically represents more than
50% of our revenue.
“In total, U.S. peripheral revenues decreased 9.4% while U.S.
coronary revenue increased 1.7%.
“Outside the U.S., international revenue of $3.3 million
increased 94% compared to last year. A COVID-19 rebound, new
account growth in Japan and the continued strong adoption of
Diamondback 360® Coronary OAS in the EU contributed to strong
international results.”
First Quarter Financial Highlights
CSI’s fiscal 2022 first quarter revenues were $58.4 million,
representing a decrease of $2.1 million, or 3.6% compared to the
first quarter last year. Gross profit margin was 75.5% due to lower
orbital atherectomy volumes.
Selling, general and administrative expenses were $41.9 million,
an increase of $1.6 million, or 3.9%. Research and development
expenses increased 10.7% to $10.0 million due to the paused
enrollment status of the ECLIPSE clinical trial in the prior year
period.
First-quarter net loss of $8.6 million, or $0.22 per basic and
diluted share, compared unfavorably to net loss of $2.1 million, or
$0.05 per basic and diluted share, in the prior year period.
Adjusted EBITDA was a loss of $1.2 million, as compared to $4.3
million in the prior year.
As of September 30, 2021, CSI had cash and marketable securities
totaling $187.6 million and no long-term borrowings.
Fiscal Year 2022 Guidance
Ward added, “We do expect that some of the procedures lost in Q1
will be recovered, and we are encouraged by improvement in recent
trends, but the pace of the recovery is difficult to predict due to
the dynamics of the Delta variant and the new variable introduced
by staffing shortages.
“These factors introduce a higher degree of uncertainty that is
now reflected in our fiscal 22 revenue guidance.
“To be clear, COVID-19 uncertainty has imposed the greatest
impact on our guidance, and sustained improvement in COVID-19 and
staffing conditions, combined with strong sales execution and
continued success in our international markets, could propel our
performance to the upper end of the range.
“The midpoint of this range reflects continued domestic
procedure volumes at the current level, stable healthcare worker
staffing, stable U.S. market share and modest growth in our
international markets, while future, unforeseen surges in COVID-19
hospitalizations, deteriorating healthcare staffing and
decelerating U.S. market share could drive us to the lower end of
this range.
“Although we don’t expect a dramatic rebound in the near term,
we do believe that COVID-19 is a transient challenge and that our
orbital atherectomy business will return to its historical
double-digit growth trajectory.”
For the fiscal year ending June 30, 2022, CSI anticipates:
- Revenue of $265 million to $285 million, representing revenue
growth of 2% to 10% compared to the prior year period;
- Gross profit as a percentage of revenues of approximately
75%;
- Net loss in a range of 5% to 8% of revenues; and
- Adjusted EBITDA in a range of 1% to 4% of revenues.
Conference Call Scheduled for Today at 8:00 a.m. CT (9:00
a.m. ET)
CSI will host a live conference call and webcast of its fiscal
first-quarter results today, November 9, 2021, at 8:00 a.m. CT
(9:00 a.m. ET). To access the live webcast, please register here.
To participate in the conference call, please register here.
First In-Human Experience with Coronary Everolimus Drug
Coated Balloon (DCB)As previously announced on November 4th,
the first patient was enrolled in a first in-human trial of the
coronary everolimus DCB being developed by Chansu Vascular
Techologies, LLC.
First patient treated with ViperCross™ peripheral support
catheterAs previously announced on September 29th, the first
patient was treated with the ViperCross peripheral support
catheter.
First patients in Canada treated with Diamondback 360®
Coronary OAS As previously announced on August 30th, the first
patients in Canada were treated with the Diamondback 360 Coronary
OAS.
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.
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) the ongoing COVID-19 pandemic and its
potential impact on our business; (iii) uncertainty relating to the
Delta variant and staffing shortages; (iv) our belief that COVID-19
is a transient challenge and that our orbital atherectomy business
will return to its historical double-digit growth trajectory; and
(v) anticipated revenue, gross profit, net loss and Adjusted
EBITDA, are forward-looking statements. These statements involve
risks and uncertainties that could cause results to differ
materially from those projected, including, but not limited to, the
ongoing COVID-19 pandemic and the impact and scope thereof on CSI,
our distribution partners, the supply chain and physicians and
facilities, including government actions related to the COVID-19
outbreak, material delays and cancellations of procedures, delayed
spending by healthcare providers, and distributor and supply chain
disruptions; regulatory developments, clearances and approvals;
approval of our products for distribution in countries outside of
the United States; approval of products for reimbursement and the
level of reimbursement in the U.S., Japan and other foreign
countries; dependence on market growth; agreements with third
parties to sell their products; the ability of us and our
distribution partners to successfully launch CSI products outside
of the United States and Japan; our ability to maintain third-party
supplier relationships and renew existing purchase agreements; our
ability to maintain our relationship with our distribution
partners; the experience of physicians regarding the effectiveness
and reliability of the products we sell; the reluctance of
physicians, hospitals and other organizations to accept new
products; the potential for unanticipated delays in enrolling
medical centers and patients for clinical trials; actual clinical
trial and study results; the impact of competitive products and
pricing; unanticipated developments affecting our estimates
regarding expenses, future revenues and capital requirements; the
difficulty of successfully managing operating costs; our ability to
manage our sales force strategy; our actual research and
development efforts and needs, including the timing of product
development programs; 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
September 30
2021
2020
Net revenues
$
58,370
$
60,544
Cost of goods sold
14,308
12,564
Gross profit
44,062
47,980
Expenses:
Selling, general and
administrative
41,851
40,282
Research and development
10,022
9,052
Amortization of intangible
assets
304
304
Total expenses
52,177
49,638
Loss from operations
(8,115
)
(1,658
)
Other (income) and expense,
net
367
355
Loss before income taxes
(8,482
)
(2,013
)
Provision for income taxes
136
63
Net loss
$
(8,618
)
$
(2,076
)
Basic and diluted earnings per
share
$
(0.22
)
$
(0.05
)
Basic and diluted weighted
average shares outstanding
39,087,472
38,683,839
Cardiovascular Systems,
Inc.
Consolidated Balance
Sheets
(Dollars in Thousands)
(unaudited)
June 30,
June 30,
2021
2020
ASSETS
Current assets
Cash and cash equivalents
$
66,864
$
71,070
Marketable securities
120,753
135,968
Accounts receivable, net
36,449
40,033
Inventories
33,127
32,313
Prepaid expenses and other
current assets
5,944
5,285
Total current assets
263,137
284,669
Property and equipment, net
28,788
28,894
Intangible assets, net
16,772
15,376
Other assets
23,573
23,628
Total assets
$
332,270
$
352,567
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
12,911
$
14,061
Accrued expenses
27,639
38,189
Deferred revenue
2,488
2,400
Total current liabilities
43,038
54,650
Long-term liabilities
Financing obligation
20,527
20,596
Deferred revenue
1,568
2,194
Other liabilities
3,945
4,169
Total liabilities
69,078
81,609
Commitments and contingencies
—
—
Total stockholders’ equity
263,192
270,958
Total liabilities and
stockholders’ equity
$
332,270
$
352,567
Non-GAAP Financial Measures
To supplement CSI's consolidated condensed financial statements
prepared in accordance with GAAP, CSI uses a non-GAAP financial
measure referred to as "Adjusted EBITDA" in this release.
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
2021
2020
Net loss
$
(8,618
)
$
(2,076
)
Less: Other (income) and expense,
net
367
355
Less: Provision for income
taxes
136
63
Loss from operations
(8,115
)
(1,658
)
Add: Stock-based compensation
5,672
4,907
Add: Depreciation and
amortization
1,258
1,029
Adjusted EBITDA
$
(1,185
)
$
4,278
Use and Economic Substance of Non-GAAP Financial Measures
Used by CSI and Usefulness of Such Non-GAAP Financial Measures to
Investors
CSI uses Adjusted EBITDA as a supplemental measure of
performance and believes this measure facilitates operating
performance comparisons from period to period and company to
company by factoring out potential differences caused by
depreciation and amortization expense, stock-based compensation,
and in-process research and development (IPR&D) charges. CSI's
management uses Adjusted EBITDA to analyze the underlying trends in
CSI's business, assess the performance of CSI's core operations,
establish operational goals and forecasts that are used to allocate
resources and evaluate CSI's performance period over period and in
relation to its competitors' operating results. Additionally, CSI's
management is evaluated on the basis of Adjusted EBITDA when
determining achievement of their incentive compensation performance
targets.
CSI believes that presenting Adjusted EBITDA provides investors
greater transparency to the information used by CSI's management
for its financial and operational decision-making and allows
investors to see CSI's results "through the eyes" of management.
CSI also believes that providing this information better enables
CSI's investors to understand CSI's operating performance and
evaluate the methodology used by CSI's management to evaluate and
measure such performance.
The following is an explanation of each of the items that
management excluded from Adjusted EBITDA and the reasons for
excluding each of these individual items:
-- Stock-based compensation. CSI excludes stock-based
compensation expense from its non-GAAP financial measures primarily
because such expense, while constituting an ongoing and recurring
expense, is not an expense that requires cash settlement. CSI's
management also believes that excluding this item from CSI's
non-GAAP results is useful to investors to understand the
application of stock-based compensation guidance and its impact on
CSI's operational performance, liquidity and its ability to make
additional investments in the company, and it allows for greater
transparency to certain line items in CSI's financial
statements.
-- Depreciation and amortization expense. CSI excludes
depreciation and amortization expense from its non-GAAP financial
measures primarily because such expenses, while constituting
ongoing and recurring expenses, are not expenses that require cash
settlement and are not used by CSI's management to assess the core
profitability of CSI's business operations. CSI's management also
believes that excluding these items from CSI's non-GAAP results is
useful to investors to understand CSI's operational performance,
liquidity and its ability to make additional investments in the
company.
-- IPR&D charges incurred in connection with asset
acquisitions. CSI excludes charges incurred in connection with
acquired IPR&D in asset acquisitions from its non-GAAP
financial measures given the one-time nature of such expense, which
is not used by CSI’s management to assess the core profitability of
its business operations. There may be fiscal periods where we do
not incur these charges and therefore they may not be included
within the table above.
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/20211109005435/en/
Cardiovascular Systems, Inc. Jack Nielsen (651) 202-4919
j.nielsen@csi360.com
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