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8-K - FORM 8-K - Cardiovascular Systems Inc | c61109e8vk.htm |
EX-99.2 - EX-99.2 - Cardiovascular Systems Inc | c61109exv99w2.htm |
Exhibit 99.1
CARDIOVASCULAR SYSTEMS REPORTS FISCAL 2011
FIRST-QUARTER FINANCIAL RESULTS
FIRST-QUARTER FINANCIAL RESULTS
Conference Call Scheduled for Today, November 3, 2010 at 3:45 PM CT (4:45 PM ET)
| Financial performance improved significantly over prior years first quarter |
| Revenue increased 20 percent to $18.2 million | ||
| Operating expenses remained consistent with prior-year levels | ||
| Adjusted EBITDA loss improved 51 percent to $(1.7) million | ||
| Net loss improved 31 percent to $(4.3) million, or $(0.28) per share |
| Scientific evidence continues to build, with over 1,700 patients studied | ||
| Over 33,000 patients have been treated to date |
St. Paul, Minn., November 3, 2010 Cardiovascular Systems, Inc. (CSI) (Nasdaq: CSII), a medical
device company developing and commercializing innovative interventional treatment systems for
vascular disease, today reported financial results for its fiscal first quarter ended September 30,
2010.
CSIs revenue in the first quarter rose to $18.2 million, a 20 percent gain over revenue of $15.2
million in the first quarter of last fiscal year. Adjusted EBITDA, calculated as loss from
operations, less depreciation and amortization and stock-based compensation expense, improved by 51
percent to a loss of $(1.7) million, as a result of stronger revenue and minimal operating expense
growth.
Net loss was $(4.3) million for the quarter, a 31 percent improvement over a $(6.2) million net
loss in the first quarter of last year. Net loss per common share was $(0.28) in the fiscal 2011
first quarter, compared to $(0.43) per common share a year earlier.
David L. Martin, CSI president and chief executive officer, said, We continued our quarterly
progress toward profitability. Our primary goals are profitability and positive cash flow,
proliferation of the Diamondback 360° as the first-line treatment for peripheral arterial disease,
and approval of a coronary application for the Diamondback System.
Revenue generated from customer reorders rose to 95 percent of total revenue for the fiscal 2011
first quarter, up from 92 percent in last years first quarter. Gross margin at 77 percent was
consistent with the same period last year, and in line with CSIs expectations. Operating
efficiencies and cost management held operating expenses to only a 2 percent increase at $17.9
million, including $500,000 of net expenses related to a legal settlement with ev3.
Operating Highlights
PAD Clinical Studies Continue to Progress
At a scientific symposium in September, data from three CSI peripheral arterial disease (PAD)
clinical studies reinforced the advantages of the Diamondback 360°. These studies CALCIUM 360°,
CONFIRM Diamondback and CLEAR 360° added to CSIs unprecedented wealth of scientific data
demonstrating the superior safety, efficacy and cost effectiveness of the Diamondback 360° System.
In 10 studies to date, over 1,700 patients have been studied by 250 physicians in 220 hospitals.
Many of these patients
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are the most difficult to treat and would have been excluded from other studies due to the severity
of their conditions, including lesions with calcified plaque and disease in small arterial vessels.
Some key findings from these studies include:
| Excellent Safety CSIs studies show extremely low rates of perforations (0.6 percent), bailout stenting (2.3 percent) and mortality (<0.1 percent). | |
| Long-term Efficacy The OASIS study results demonstrate very low lesion retreatment rates of 2.4 percent at six months and 13.6 percent at 24 months. |
According to Martin, Two minutes of treatment routinely removes decades of arterial plaque
buildup. The Diamondback 360° offers patients a minimally invasive solution to a life-threatening
disease. Our scientific studies feature patient types previously unstudied, including patients
scheduled for amputation, patients with widespread PAD, and patients with hard calcified plaque.
Additionally, we are the only company with a product that routinely treats small vessels, which are
critical to providing blood flow to the foot.
Enrollment Proceeding for Coronary Pivotal Trial
In April, CSI received FDA unconditional Investigational Device Exemption (IDE) approval for its
ORBIT II trial to evaluate the safety and effectiveness of the Diamondback 360° to treat calcified
coronary lesions. ORBIT II is expected to enroll 429 patients, subject to FDA review of data from
the first 50 cases. CSI expects to complete enrollment of the first 50 patients by the end of this
calendar year.
CSIs unique orbital technology has a successful track record in treating small vessels with
calcified lesions and may be well suited for a coronary application, potentially sparing many
patients from highly invasive surgery, while improving long-term outcomes. The ORBIT I coronary
feasibility trial provided strong safety and efficacy data, and CSI believes it will be able to
repeat those outcomes in ORBIT II.
Second-Generation PAD System Introduced
In July, CSI introduced the Diamondback Predator 360® PAD System, a second-generation
product with improved crowns and shafts that uses the same mechanism of action as the
Diamondback 360°. With the Diamondback Predator 360°, physicians can remove a high percentage of
plaque in less time and easily advance through difficult occlusions.
Martin continued, Physicians are asking for fast, safe and easy-to-use PAD products. Patients are
asking to be mobile and pain free, and to avoid retreatment. We are committed to meeting all these
needs for patients and their doctors.
Fiscal 2011 Second-Quarter Outlook
For the fiscal 2011 second quarter ending December 31, 2010, CSI management anticipates:
| Revenue in the range of $18.5 million to $19.5 million, or growth of 23 percent to 29 percent over the second quarter of fiscal 2010; | |
| Gross profit as a percentage of revenue at approximately the same level as the fiscal 2011 first quarter; | |
| Total operating expenses similar to the fiscal 2011 first quarter, excluding the $500,000 net expense for the settlement of the ev3 lawsuit in the first quarter of this fiscal year; | |
| Net loss in the range of $(2.7) million to $(3.3) million, or loss per common share ranging from $(0.17) to $(0.21), assuming 15.7 million average shares outstanding; and | |
| Adjusted EBITDA loss between $(0.1) million and $(0.7) million. |
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Management continues to balance growth with progress toward profitability and positive cash flow,
and expects the net loss and adjusted EBITDA to improve as revenue increases.
Conference Call Today at 3:45 PM CT (4:45 PM ET)
Cardiovascular Systems, Inc. will host a live conference call and webcast of its fiscal
first-quarter results today, November 3, 2010, at 3:45 p.m. CT (4:45 p.m. ET). To access the call,
dial (888) 713-4213 and enter access number 71223045. Please dial in at least 10 minutes prior to
the call and wait for operator assistance. To listen to the live webcast, go to the investor
information section of the companys website, www.csi360.com, and click on the webcast
icon. A webcast replay will be available beginning at 7 p.m. CT the same day.
For an audio replay of the conference call, dial (888) 286-8010 and enter access number 84340989.
The audio replay will be available beginning at 8 p.m. CT on Wednesday, November 3, 2010, through 6
p.m. CT on Friday, November 5, 2010.
Use of Non-GAAP Financial Measures
To supplement CSIs 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 CSIs financial results prepared in accordance with GAAP.
About Cardiovascular Systems, Inc.
Cardiovascular Systems, Inc., based in St. Paul, Minn., is a medical device company focused on
developing and commercializing interventional treatment systems for vascular disease. The companys
Diamondback 360® and Diamondback Predator 360® PAD Systems treat calcified
and fibrotic plaque in arterial vessels throughout the leg in a few minutes of treatment time, and
address many of the limitations associated with existing surgical, catheter and pharmacological
treatment alternatives. As many as 12 million Americans suffer from peripheral arterial disease
(PAD), which is caused by the accumulation of plaque in peripheral arteries (commonly the pelvis or
leg) reducing blood flow. Symptoms include leg pain when walking or at rest, and can lead to tissue
loss and eventually limb amputation. In August 2007, the U.S. FDA granted 510(k) clearance for the
use of the Diamondback 360° as a therapy for PAD, and CSI commenced a U.S. product launch in
September 2007. Since then, more than 33,000 procedures have been performed using the Diamondback
360° in leading institutions across the United States. For more information visit the companys Web
site at www.csi360.com.
Safe Harbor
Certain statements in this news release are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and are provided under the protection of the safe
harbor for forward-looking statements provided by that Act. For example, statements in this press
release regarding (i) CSIs future profitability; (ii) the use of the Diamondback 360° to treat
coronary lesions; (iii) CSIs clinical trials; (iv) anticipated revenue, gross profit, operating
expenses, net loss and adjusted EBITDA in future periods; and (v) managements expectation that net
loss and adjusted EBITDA will improve as revenue increases, are forward-looking statements. These
statements involve risks and uncertainties which could cause results to differ materially from
those projected, including but not limited to the potential for unanticipated delays in enrolling
medical centers and patients for clinical trials; dependence on market growth; the reluctance of
physicians to accept new products; the impact of competitive products and pricing; the difficulty
to successfully manage operating costs; fluctuations in quarterly results; approval of products for
reimbursement and the level of reimbursement; general economic
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conditions and other factors detailed from time to time in CSIs 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, CSIs actual results may differ
materially from the expected results discussed in the forward-looking statements contained in this
release. The forward-looking statements made in this release are made only as of the date of this
release, and CSI undertakes no obligation to update them to reflect subsequent events or
circumstances.
Product Disclosure
The Diamondback 360® PAD System and Diamondback 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, death,
dissection, perforation, distal embolization, thrombus formation, hematuria, abrupt or acute
vessel closure, or arterial spasm.
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Cardiovascular Systems, Inc.
Consolidated Statements of Operations
(Dollars in Thousands, except per share and share amounts)
(unaudited)
Consolidated Statements of Operations
(Dollars in Thousands, except per share and share amounts)
(unaudited)
Three Months Ended | ||||||||
September 30, | ||||||||
2010 | 2009 | |||||||
Revenues |
$ | 18,165 | $ | 15,198 | ||||
Cost of goods sold |
4,141 | 3,488 | ||||||
Gross profit |
14,024 | 11,710 | ||||||
Selling, general and administrative |
15,496 | 14,856 | ||||||
Research and development |
2,422 | 2,781 | ||||||
Total expenses |
17,918 | 17,637 | ||||||
Loss from operations |
(3,894 | ) | (5,927 | ) | ||||
Other income (expense): |
||||||||
Interest expense |
(365 | ) | (371 | ) | ||||
Interest income |
7 | 98 | ||||||
Other |
(16 | ) | | |||||
Total other expense |
(374 | ) | (273 | ) | ||||
Net loss |
$ | (4,268 | ) | $ | (6,200 | ) | ||
Net loss per common share: |
||||||||
Basic and diluted |
$ | (0.28 | ) | $ | (0.43 | ) | ||
Weighted average common shares
used in computation: |
||||||||
Basic and diluted |
15,369,157 | 14,516,843 | ||||||
Stock-based compensation supplemental detail (included in amounts above): | ||||||||
Cost of goods sold |
$ | 277 | $ | 129 | ||||
Selling, general and administrative |
1,397 | 1,811 | ||||||
Research and development |
315 | 281 | ||||||
Totals |
$ | 1,989 | $ | 2,221 | ||||
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Cardiovascular Systems, Inc.
Consolidated Balance Sheets
(Dollars in Thousands)
(unaudited)
Consolidated Balance Sheets
(Dollars in Thousands)
(unaudited)
September 30, | June 30, | |||||||
2010 | 2010 | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 22,006 | $ | 23,717 | ||||
Accounts receivable, net |
10,579 | 9,394 | ||||||
Inventories |
4,456 | 4,319 | ||||||
Prepaid expenses and other current assets |
1,448 | 1,048 | ||||||
Total current assets |
38,489 | 38,478 | ||||||
Property and equipment, net |
2,015 | 1,964 | ||||||
Patents, net |
1,817 | 1,712 | ||||||
Other assets |
106 | 180 | ||||||
Total assets |
$ | 42,427 | $ | 42,334 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Current maturities of long-term debt |
$ | 4,600 | $ | 3,613 | ||||
Accounts payable |
5,038 | 3,353 | ||||||
Deferred grant incentive |
1,535 | 1,181 | ||||||
Accrued expenses |
6,869 | 6,569 | ||||||
Total current liabilities |
18,042 | 14,716 | ||||||
Long-term liabilities |
||||||||
Long-term debt, net of current maturities |
6,366 | 7,286 | ||||||
Deferred grant incentive |
2,218 | 2,208 | ||||||
Other liabilities |
365 | 409 | ||||||
Total long-term liabilities |
8,949 | 9,903 | ||||||
Total liabilities |
26,991 | 24,619 | ||||||
Commitments and contingencies |
||||||||
Total stockholders equity |
15,436 | 17,715 | ||||||
Total liabilities and stockholders equity |
$ | 42,427 | $ | 42,334 | ||||
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Non-GAAP Financial Measures
To supplement CSIs 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 CSIs
management uses Adjusted EBITDA to conduct and evaluate its business, the economic substance behind
managements decision to use Adjusted EBITDA, the substantive reasons why management believes that
Adjusted EBITDA provides useful information to investors, the material limitations associated with
the use of Adjusted EBITDA and the manner in which management compensates for those limitations is
included following the reconciliation table below.
Cardiovascular Systems, Inc.
Supplemental Sales Information
(Dollars in Thousands)
(unaudited)
Supplemental Sales Information
(Dollars in Thousands)
(unaudited)
Three months ended | ||||||||||||
September 30, | ||||||||||||
2010 | 2009 | |||||||||||
Device revenue |
$ | 16,063 | $ | 13,640 | ||||||||
Other product revenue |
2,102 | 1,558 | ||||||||||
Total revenue |
$ | 18,165 | $ | 15,198 | ||||||||
Device units sold |
5,342 | 4,541 | ||||||||||
New customers |
56 | 55 | ||||||||||
Reorder revenue % |
95 | % | 92 | % | ||||||||
Cardiovascular Systems, Inc.
Adjusted EBITDA
(Dollars in Thousands)
(unaudited)
Adjusted EBITDA
(Dollars in Thousands)
(unaudited)
Projected Range | ||||||||||||||||
Three Months Ended | Three Months Ending | |||||||||||||||
Sept. 30, | Dec. 31, 2010 | |||||||||||||||
2010 | 2009 | High | Low | |||||||||||||
Loss from operations |
$ | (3,894 | ) | $ | (5,927 | ) | $ | (2,300 | ) | $ | (2,900 | ) | ||||
Add: Stock-based
compensation |
1,989 | 2,221 | 2,000 | 2,000 | ||||||||||||
Add: Depreciation
and amortization |
164 | 136 | 200 | 200 | ||||||||||||
Adjusted EBITDA |
$ | (1,741 | ) | $ | (3,570 | ) | $ | (100 | ) | $ | (700 | ) | ||||
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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. CSIs management uses Adjusted EBITDA to analyze the
underlying trends in CSIs business, assess the performance of CSIs core operations, establish
operational goals and forecasts that are used to allocate resources and evaluate CSIs performance
period over period and in relation to its competitors operating results. Additionally, CSIs
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 CSIs management for its financial and operational decision-making and allows
investors to see CSIs results through the eyes of management. CSI also believes that providing
this information better enables CSIs investors to understand CSIs operating performance and
evaluate the methodology used by CSIs 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. CSIs management also believes that
excluding this item from CSIs non-GAAP results is useful to investors to understand the
application of stock-based compensation guidance and its impact on CSIs operational performance,
liquidity and its ability to make additional investments in the company, and it allows for greater
transparency to certain line items in CSIs 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 CSIs
management to assess the core profitability of CSIs business operations. CSIs management also
believes that excluding these items from CSIs non-GAAP results is useful to investors to
understand CSIs 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 CSIs financial results prepared in accordance with GAAP. Some of
the limitations associated with CSIs use of these non-GAAP financial measures are:
Items such as stock-based compensation do not directly affect CSIs cash flow position; however,
such items reflect economic costs to CSI and are not reflected in CSIs Adjusted EBITDA and
therefore these non-GAAP measures do not reflect the full economic effect of these items.
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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.
CSIs 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.
Contacts:
Cardiovascular Systems, Inc.
|
Padilla Speer Beardsley Inc. | |
Investor Relations
|
Marian Briggs | |
(651) 259-2800
|
(612) 455-1742 | |
investorrelations@csi360.com
|
mbriggs@psbpr.com | |
Nancy A. Johnson | ||
(612) 455-1745 | ||
njohnson@psbpr.com |
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