Webcast Scheduled for Tomorrow, August 3,
2022, at 9:00 a.m. CT (10:00 a.m. ET)
- Revenues of $62.5 million increased 11% sequentially
compared to third quarter this year and decreased 12% compared to
fourth quarter last year
- Management provides fiscal 23 revenue guidance of $255
million to $265 million, representing 8% to 12% growth compared to
fiscal 22
- Capital Markets Day on August 3 to highlight product
development in large, high-growth markets
Cardiovascular Systems, Inc. (CSI®) (NASDAQ: CSII), a medical
device company developing and commercializing innovative
interventional treatment systems for patients with vascular and
coronary artery disease, today reported financial results for its
fourth quarter and full year, ended June 30, 2022.
Executive Commentary – Scott Ward, Chairman, President and
CEO
“During Q4, we achieved strong sequential growth across all
business segments with our U.S. peripheral and coronary atherectomy
franchises growing 9% and 16% over prior quarter, respectively.
International revenues grew 14% sequentially to $5 million.
“In addition, key operating statistics, like new accounts, new
customers trained and new contracts, continue to demonstrate strong
demand for our products and position us for continued momentum in
fiscal 23.
“We also achieved our key product development milestones in the
quarter. Following the first in human experiences with our Propel™
percutaneous ventricular assist device in March, we recently
submitted the investigational device exemption for the early
feasibility study, which we expect to start in Q3. We also remain
on track to achieve the milestones for our thrombectomy devices,
intravascular lithotripsy and Everolimus drug-coated balloons.
“With strong execution in R&D and a compelling rebound in
sales, we have renewed momentum in our business and we are excited
about the prospects for a strong year in fiscal 23.”
Fourth Quarter Financial Highlights
CSI’s fiscal 2022 fourth quarter revenues were $62.5 million,
representing a decrease of $8.5 million, or 12.0% compared to the
fourth quarter last year. Gross profit margin was 74.0%.
Selling, general and administrative expenses were $46.6 million,
an increase of $0.9 million, or 1.9%. Research and development
expenses decreased 5.1% to $8.8 million due to the timing of
development activities.
Fourth-quarter net loss of $9.7 million, or $0.25 per basic and
diluted share, compared unfavorably to a loss of $5.3 million, or
$0.14 per basic and diluted share in the prior year period. The
Adjusted EBITDA loss increased to $4.3 million from near breakeven
in the prior year.
Fiscal Year 2022 Financial Highlights
CSI’s fiscal year 2022 revenues were $236.2 million,
representing a decrease of $22.8 million, or 8.8%. Gross profit
margin for the full year was 73.1%.
Selling, general and administrative expenses were $170.5
million, an increase of $3.0 million, or 1.8%, compared to the year
ended June 30, 2021 as a result of increased field sales
activities, customer education programs and medical conferences.
Research and development expenses of $36.7 million decreased $4.3
million, or 10.6%, due to in process research and development
(IPR&D) charges from the acquisition of a product portfolio of
peripheral microcatheters for $3.4 million in the prior-year
period.
Net loss of $36.9 million, or $0.94 per basic and diluted share,
compared unfavorably to net loss of $13.4 million, or $0.35 per
basic and diluted share, in the prior-year period. Adjusted EBITDA
was $(12.9) million, as compared to $8.6 million in the prior
year.
As of June 30, 2022, CSI had cash and marketable securities
totaling $159.8 million and no long-term borrowings.
Fiscal Year 2023 Guidance
Ward added, “Our guidance anticipates attractive revenue growth
in fiscal 23 with a gradual improvement in the state of the U.S.
healthcare system combined with strong sales execution,
accelerating revenue from the sale of interventional support
devices, successful new product introductions and international
expansion. Guidance assumes no new Covid headwinds, a gradual
improvement in US hospital staffing shortages and the full
resolution of the imaging contrast shortage in September.”
For the fiscal year ending June 30, 2023, CSI anticipates:
- Revenue of $255 million to $265 million;
- Gross profit as a percentage of approximately 72% to 74% of
revenues;
- Research and development expenses will be approximately 16% to
17% of revenues;
- Net loss in a range of 9% to 11% of revenues; and
- Adjusted EBITDA near break-even.
Webcast Scheduled for Tomorrow at 9:00 a.m. CT (10:00 a.m.
ET)
In lieu of hosting a quarterly earnings call, CSI management
will discuss fourth-quarter results at the beginning of its Capital
Markets Day on August 3, 2022, at 9:00 a.m. CT (10:00 a.m. ET). To
access the live webcast click here. A webcast replay will be
available later the same day.
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 Centers for Disease Control and
Prevention, 18 million people in the United States have CAD, the
most common form of heart disease. Heart disease claims more than
650,000 lives in the United States each year. According to
estimates, arterial calcium is present in 38 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 Peripheral Artery Disease (PAD)
Eighteen to 20 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 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
more information, visit www.csi360.com and follow us on LinkedIn
and Twitter.
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, goals and prospects; (ii) the ongoing COVID-19 pandemic,
its potential impact on our business, including trends in procedure
volumes, the effects on the healthcare system, staffing shortages,
patients returning for interventions, and case backlogs; (iii)
expansion of our product portfolio and milestones relating thereto,
including the specific products, clinical trials and experiences,
and timing thereof, and the benefits to CSI; (iv) our expectations
regarding attractive revenue growth, improvement in the state of
the U.S. healthcare system, sales execution, accelerating revenue
from the sale of interventional support devices, successful new
product introductions, international expansion, Covid headwinds,
staffing shortages and the resolution of the imaging contrast
shortage; and (v) anticipated revenue, gross profit, research and
development expenses, net loss and Adjusted EBITDA, are
forward-looking statements. These statements involve risks and
uncertainties that could cause results to differ materially from
those projected, including, but not limited to, the 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. and other 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; our
ability to maintain third-party supplier relationships and renew
existing purchase agreements; our ability to maintain our
relationships 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; successful
collaboration on the development of new products; agreements with
development partners, advisors and other third parties; the ability
of CSI and these third parties to meet development, contractual and
other milestones; contractual rights and obligations; technical
challenges; 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
Year Ended
June 30,
June 30,
2022
2021
2022
2021
Net revenues
$
62,496
$
70,987
$
236,222
$
258,973
Cost of goods sold
16,269
20,634
63,440
61,131
Gross profit
46,227
50,353
172,782
197,842
Expenses:
Selling, general and administrative
46,593
45,713
170,526
167,498
Research and development
8,773
9,245
36,720
41,061
Amortization of intangible assets
346
304
1,342
1,216
Total expenses
55,712
55,262
208,588
209,775
Loss from operations
(9,485
)
(4,909
)
(35,806
)
(11,933
)
Other (income) expense, net
157
313
817
1,236
Loss before income taxes
(9,642
)
(5,222
)
(36,623
)
(13,169
)
Provision for income taxes
48
63
310
252
Net loss
$
(9,690
)
$
(5,285
)
$
(36,933
)
$
(13,421
)
Basic and diluted earnings per share
$
(0.25
)
$
(0.14
)
$
(0.94
)
$
(0.35
)
Basic and diluted weighted average shares
outstanding
39,346,771
38,926,490
39,229,734
38,832,002
Cardiovascular Systems,
Inc.
Consolidated Balance
Sheets
(Dollars in Thousands)
(unaudited)
June 30,
June 30,
2022
2021
ASSETS
Current assets
Cash and cash equivalents
$
66,424
$
71,070
Marketable securities
93,409
135,968
Accounts receivable, net
39,678
40,033
Inventories
34,567
32,313
Prepaid expenses and other current
assets
7,768
5,285
Total current assets
241,846
284,669
Property and equipment, net
29,035
28,894
Intangible assets, net
15,734
15,376
Strategic investments
33,425
20,657
Other assets
2,637
2,971
Total assets
$
322,677
$
352,567
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
14,383
$
14,061
Accrued expenses
23,464
38,189
Deferred revenue
2,107
2,400
Total current liabilities
39,954
54,650
Long-term liabilities
Financing obligation
20,298
20,596
Deferred revenue
—
2,194
Other liabilities
12,945
4,169
Total liabilities
73,197
81,609
Commitments and contingencies
—
—
Total stockholders’ equity
249,480
270,958
Total liabilities and stockholders’
equity
$
322,677
$
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 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
Year Ended
June 30,
June 30,
2022
2021
2022
2021
Net loss
$
(9,690
)
$
(5,285
)
$
(36,933
)
$
(13,421
)
Less: Other (income) and expense, net
157
313
817
1,236
Less: Provision for income taxes
48
63
310
252
Loss from operations
(9,485
)
(4,909
)
(35,806
)
(11,933
)
Add: Stock-based compensation
4,037
3,742
17,841
16,230
Add: Depreciation and amortization
1,198
1,169
5,029
4,312
Adjusted EBITDA
$
(4,250
)
$
2
$
(12,936
)
$
8,609
Use and Economic Substance of Non-GAAP Financial Measures
Used by CSI and Usefulness of Such Non-GAAP Financial Measures to
Investors
CSI uses Adjusted EBITDA as a supplemental measure of
performance and believes this measure facilitates operating
performance comparisons from period to period and company to
company by factoring out potential differences caused by
depreciation and amortization expense and stock-based compensation.
CSI's management uses Adjusted EBITDA to analyze the underlying
trends in CSI's business, assess the performance of CSI's core
operations, establish operational goals and forecasts that are used
to allocate resources and evaluate CSI's performance period over
period and in relation to its competitors' operating results.
Additionally, CSI's management is evaluated on the basis of
Adjusted EBITDA when determining achievement of their incentive
compensation performance targets.
CSI believes that presenting Adjusted EBITDA provides investors
greater transparency to the information used by CSI's management
for its financial and operational decision-making and allows
investors to see CSI's results "through the eyes" of management.
CSI also believes that providing this information better enables
CSI's investors to understand CSI's operating performance and
evaluate the methodology used by CSI's management to evaluate and
measure such performance.
The following is an explanation of each of the items that
management excluded from Adjusted EBITDA and the reasons for
excluding each of these individual items:
-- Stock-based compensation. CSI excludes stock-based
compensation expense from its non-GAAP financial measures primarily
because such expense, while constituting an ongoing and recurring
expense, is not an expense that requires cash settlement. CSI's
management also believes that excluding this item from CSI's
non-GAAP results is useful to investors to understand the
application of stock-based compensation guidance and its impact on
CSI's operational performance, liquidity and its ability to make
additional investments in the company, and it allows for greater
transparency to certain line items in CSI's financial
statements.
-- Depreciation and amortization expense. CSI excludes
depreciation and amortization expense from its non-GAAP financial
measures primarily because such expenses, while constituting
ongoing and recurring expenses, are not expenses that require cash
settlement and are not used by CSI's management to assess the core
profitability of CSI's business operations. CSI's management also
believes that excluding these items from CSI's non-GAAP results is
useful to investors to understand CSI's operational performance,
liquidity and its ability to make additional investments in the
company.
Beginning with the quarter ended March 31, 2022, following
correspondence from the staff of the U.S. Securities and Exchange
Commission, we no longer exclude IPR&D charges incurred in
connection with asset acquisitions from Adjusted EBITDA or any
other reported non-GAAP financial measures. For purposes of
comparability, we have revised the reconciliation table above for
the three and twelve months ended June 30, 2021 to reflect this
approach.
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/20220802005993/en/
Cardiovascular Systems, Inc. Jack Nielsen Vice President,
Investor Relations & Corporate Communications (651) 202-4919
j.nielsen@csi360.com
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