[January 30, 2013] |
|
Cardiovascular Systems Reports Fiscal 2013 Second-Quarter Financial Results
ST. PAUL, Minn. --(Business Wire)--
Cardiovascular Systems, Inc. (Nasdaq: CSII):
-
Revenues of $25.3 million rose 28 percent over the fiscal 2012
second quarter, and 9 percent sequentially over the fiscal 2013 first
quarter
-
Stealth 360°® revenues increased to 93
percent of total device revenues
-
Office-based lab revenues continued to grow at a double-digit
consecutive quarter rate
-
ORBIT II coronary trial enrollment has been completed
-
PMA submission of module 3, which includes ORBIT II clinical
data, is expected to occur around March 31, 2013
Cardiovascular Systems, Inc. (CSI (News - Alert)) (Nasdaq: CSII), a medical device
company developing and commercializing innovative interventional
treatment systems for vascular disease, today reported financial results
for its fiscal second quarter ended December 31, 2012.
CSI's second-quarter revenues rose to $25.3 million, a 28 percent gain
from $19.7 million in the second quarter of fiscal 2012. Conversions to
the company's Stealth 360°® PAD System continued at a high
rate, with Stealth 360° revenues growing to 93 percent of total device
revenues. Revenues from office-based labs (OBLs) increased at a
double-digit rate over the fiscal 2013 first quarter. Customer reorder
revenues remained high at 97 percent of total revenue.
The fiscal 2013 second-quarter net loss was better than expected at
$(5.8) million, or $(0.28) per common share, compared to $(4.1) million,
or $(0.23) per common share, in the fiscal 2012 second quarter. Net loss
includes expense of $(0.3) million, or $(0.01) per common share, from
valuation changes of a conversion asset related to convertible debt,
versus $(0.2) million, or $(0.01) per common share, in the prior-year
period. Adjusted EBITDA was a loss of $(3.2) million, compared to a loss
of $(2.2) million in fiscal 2012. Higher losses were primarily due to
planned investments of approximately $4.7 million to advance the ORBIT
II coronary clinical trial and prepare for a coronary market launch, as
well as competitive enhancements to sales and marketing, and expansion
of medical education programs.
The company's second-quarter gross profit margin was 76 percent, similar
to the prior-year quarter. The favorable effect of increased production
volume was offset by the higher unit cost of the Stealth 360° compared
to the predecessor Diamondback 360° device and by investments to ramp-up
CSI's manufacturing facility in Texas for additional future capacity.
David L. Martin, CSI president and chief executive officer, said, "We
are very pleased with CSI's strong fiscal second-quarter results. Our
focused sales strategy and educational initiatives have continued to
drive rapid adoption of our easy-to-use Stealth 360° with PAD physicians
in both hospital and office-based lab settings. Our technology is
scientifically proven as a safe and effective treatment for PAD,
especially in disease complicated by calcium."
Martin continued, "Additionally, we moved closer to FDA submission for a
coronary application, which has a market opportunity estimated to exceed
$1.5 billion annually in the U.S. alone. Coronary arterial calcium is a
vastly underestimated problem in medicine today. At the 2012
Transcatheter Cardiovascular Therapeutics conference, Dr. Philippe
Genereux presented new data proving, with statistical significance, that
coronary patients with moderate to severe calcium were more likely to
die and have major adverse coronary events than patients with mild or no
calcium. Completing ORBIT II enrollment was a significant milestone
toward obtaining approval to treat this devastating disease in coronary
patients."
In the first six months of fiscal 2013, revenues increased to $48.6
million, up 27 percent from the fiscal 2012 six-month period. Gross
margin was comparable to the prior-year period at 77 percent, while
operating expenses rose 32 percent due to planned investments similar to
those discussed for the second quarter, including approximately $8.5
million for the ORBIT II trial and coronary market preparation. Adjusted
EBITDA loss increased by $(2.8) million to $(6.4) million, while the net
loss totaled $(11.0) million, or $(0.53) per common share, compared to
$(8.0) million, or $(0.45) per common share, in fiscal 2012.
ORBIT II Coronary Trial Enrollment Completed During its
fiscal second quarter, CSI completed enrollment in its ORBIT II clinical
trial, enrolling 443 patients. ORBIT II is evaluating the safety and
effectiveness of the company's orbital atherectomy technology in
treating severely calcified coronary arteries. It is estimated that
moderate to severe arterial calcium is present in nearly 40 percent of
those treated annually for coronary artery disease (CAD). ORBIT II is
the first investigational device exemption (IDE) trial designed to study
these difficult-to-treat patients.
CSI received IDE approval from the FDA for the ORBIT II study in April
2010, and 49 U.S. medical centers enrolled patients. The primary
endpoints of ORBIT II are based on a patient follow-up 30-days post
procedure. CSI and the FDA agreed to a modular pre-market approval (PMA)
submission. To date, modules 1 (preclinical) and 2
(manufacturing/quality system) have been submitted to the agency and are
currently under review. The company's PMA will be final on submission of
module 3 which includes ORBIT II clinical data and proposed labeling.
CSI is targeting to submit the third module around March 31, 2013.
Fiscal 2013 Third-Quarter Outlook Martin added, "We continue
to make growth investments in the ORBIT II trial and coronary launch
preparation, as well as in sales and marketing professionals, and
education programs to further drive PAD adoption. Investing in these
opportunities will help us realize the full potential of our technology,
support ongoing attractive revenue growth and lead us to profitability
over the long term."
For the fiscal 2013 third quarter ending March 31, 2013, CSI anticipates:
-
Revenue growth of 20 percent to 25 percent over the third quarter of
fiscal 2012, to a range of $25.5 million to $26.5 million;
-
Gross profit as a percentage of revenues similar to the second quarter
of fiscal 2013;
-
Operating expenses 8 percent to 9 percent higher than the second
quarter of fiscal 2013, including approximately $500,000 related to
the medical device tax and approximately $4.5 million for the ORBIT II
trial and preparation for a potential coronary market launch in the
future;
-
Interest and other expense of approximately $(350,000), excluding the
potential effect of debt conversions or valuation changes of the
related conversion option asset; and
-
Net loss in the range of $(6.6) million to $(7.2) million, or loss per
common share ranging from $(0.31) to $(0.34), assuming 21.2 million
average shares outstanding, and excluding the potential effect of debt
conversions or valuation changes of the related conversion option
asset.
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
second-quarter results today, January 30, 2013, at 3:45 p.m. CT (4:45
p.m. ET). To access the call, dial (888) 680-0860 and enter access
number 21740396. Please dial in at least 10 minutes prior to the call
and wait for assistance, or dial "0" for the operator. 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 63349889. The audio replay will be available
beginning at 5:45 p.m. CT on Wednesday, January 30, 2013, through 11
p.m. CT on Wednesday, February 6, 2013.
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 Arterial Disease As many as 12 million
Americans, most over age 65, suffer from 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. 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°,
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 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 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 510(k)
clearance for the use of the Diamondback Orbital Atherectomy System in
August 2007. To date, over 100,000 of CSI's devices have been sold to
leading institutions across the United States. CSI has also commenced
its ORBIT II Investigational Device Exemption clinical trial to evaluate
the safety and effectiveness of its orbital technology in treating
coronary arteries. The coronary system is limited by federal law to
investigational use and is currently not commercially available in 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) CSI's potential
coronary application; (ii) CSI's clinical trials; (iii) the anticipated
timing of Module 3 of the company's coronary PMA submission; (iv) the
$1.5 billion estimate of the market for a coronary application; (v) the
potential growth and profitability driven by CSI's anticipated
investments; and (vi) anticipated revenue, gross profit, operating
expenses, interest and other expense, and net loss, 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 dependence on market growth; the reluctance of physicians to
accept new products; the effectiveness of the Stealth 360°; actual
clinical trial results; the impact of competitive products and pricing;
the difficulty to successfully manage operating costs; fluctuations in
quarterly results; FDA clearances and approvals; 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 (News - Alert)
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 Stealth 360°® PAD System,
Diamondback 360® PAD System and Predator 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 (News - Alert), 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
|
|
|
Six Months Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
Revenues
|
|
|
$
|
25,309
|
|
|
|
$
|
19,718
|
|
|
|
$
|
48,602
|
|
|
|
$
|
38,378
|
|
Cost of goods sold
|
|
|
|
5,958
|
|
|
|
|
4,560
|
|
|
|
|
11,212
|
|
|
|
|
8,906
|
|
Gross profit
|
|
|
|
19,351
|
|
|
|
|
15,158
|
|
|
|
|
37,390
|
|
|
|
|
29,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
|
20,418
|
|
|
|
|
15,733
|
|
|
|
|
40,441
|
|
|
|
|
31,083
|
|
Research and development
|
|
|
|
4,055
|
|
|
|
|
3,084
|
|
|
|
|
7,277
|
|
|
|
|
5,148
|
|
Total expenses
|
|
|
|
24,473
|
|
|
|
|
18,817
|
|
|
|
|
47,718
|
|
|
|
|
36,231
|
|
Loss from operations
|
|
|
|
(5,122
|
)
|
|
|
|
(3,659
|
)
|
|
|
|
(10,328
|
)
|
|
|
|
(6,759
|
)
|
Interest and other (expense) income
|
|
|
|
(645
|
)
|
|
|
|
(476
|
)
|
|
|
|
(649
|
)
|
|
|
|
(1,235
|
)
|
Net loss
|
|
|
$
|
(5,767
|
)
|
|
|
$
|
(4,135
|
)
|
|
|
$
|
(10,977
|
)
|
|
|
$
|
(7,994
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
(0.23
|
)
|
|
|
$
|
(0.53
|
)
|
|
|
$
|
(0.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares used in computation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
|
|
20,699,222
|
|
|
|
|
17,781,326
|
|
|
|
|
20,548,113
|
|
|
|
|
17,634,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
Consolidated Balance Sheets
|
(Dollars in Thousands)
|
(unaudited)
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2012
|
|
|
2012
|
ASSETS
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
29,223
|
|
|
$
|
35,529
|
Accounts receivable, net
|
|
|
|
13,020
|
|
|
|
13,644
|
Inventories
|
|
|
|
7,161
|
|
|
|
7,061
|
Prepaid expenses and other current assets
|
|
|
|
1,124
|
|
|
|
1,536
|
Total current assets
|
|
|
|
50,528
|
|
|
|
57,770
|
Property and equipment, net
|
|
|
|
2,342
|
|
|
|
2,163
|
Patents, net
|
|
|
|
2,938
|
|
|
|
2,635
|
Other assets
|
|
|
|
839
|
|
|
|
556
|
Total assets
|
|
|
$
|
56,647
|
|
|
$
|
63,124
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
Current liabilities
|
|
|
|
|
|
|
Current maturities of long-term debt
|
|
|
$
|
4,678
|
|
|
$
|
4,678
|
Accounts payable
|
|
|
|
5,012
|
|
|
|
5,610
|
Deferred grant incentive
|
|
|
|
302
|
|
|
|
302
|
Accrued expenses
|
|
|
|
6,946
|
|
|
|
7,262
|
Total current liabilities
|
|
|
|
16,938
|
|
|
|
17,852
|
Long-term liabilities
|
|
|
|
|
|
|
Long-term debt, net of current maturities
|
|
|
|
10,400
|
|
|
|
12,842
|
Other liabilities
|
|
|
|
151
|
|
|
|
241
|
Total long-term liabilities
|
|
|
|
10,551
|
|
|
|
13,083
|
Total liabilities
|
|
|
|
27,489
|
|
|
|
30,935
|
Commitments and contingencies
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
|
29,158
|
|
|
|
32,189
|
Total liabilities and stockholders' equity
|
|
|
$
|
56,647
|
|
|
$
|
63,124
|
|
|
|
|
|
|
|
|
|
|
Cardiovascular Systems, Inc.
|
Supplemental Sales Information
|
(Dollars in Thousands)
|
(unaudited)
|
|
|
|
|
Three months ended
|
|
|
Six months ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Device revenue
|
|
|
$
|
22,252
|
|
|
|
$
|
17,494
|
|
|
|
$
|
42,728
|
|
|
|
$
|
34,042
|
|
Other product revenue
|
|
|
|
3,057
|
|
|
|
|
2,224
|
|
|
|
|
5,874
|
|
|
|
|
4,336
|
|
Total revenue
|
|
|
$
|
25,309
|
|
|
|
$
|
19,718
|
|
|
|
$
|
48,602
|
|
|
|
$
|
38,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Device units sold
|
|
|
|
7,088
|
|
|
|
|
5,509
|
|
|
|
|
13,496
|
|
|
|
|
10,795
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New customers
|
|
|
|
48
|
|
|
|
|
41
|
|
|
|
|
82
|
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reorder revenue %
|
|
|
|
97
|
%
|
|
|
|
95
|
%
|
|
|
|
97
|
%
|
|
|
|
95
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
Adjusted EBITDA
|
(Dollars in Thousands)
|
(unaudited)
|
|
|
|
|
Actual
|
|
|
|
Three Months Ended
|
|
|
Six Months Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
Loss from operations
|
|
|
$
|
(5,122
|
)
|
|
|
$
|
(3,659
|
)
|
|
|
$
|
(10,328
|
)
|
|
|
$
|
(6,759
|
)
|
Add: Stock-based compensation
|
|
|
|
1,685
|
|
|
|
|
1,263
|
|
|
|
|
3,440
|
|
|
|
|
2,719
|
|
Add: Depreciation and amortization
|
|
|
|
226
|
|
|
|
|
227
|
|
|
|
|
447
|
|
|
|
|
448
|
|
Adjusted EBITDA
|
|
|
$
|
(3,211
|
)
|
|
|
$
|
(2,169
|
)
|
|
|
$
|
(6,441
|
)
|
|
|
$
|
(3,592
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
[ Back To TMCnet.com's Homepage ]
|