Conference Call Scheduled for Today, January 25, 2017, at 3:45 PM CT (4:45 PM ET)
- Revenues reached $50.0 million, growing 21% compared to second quarter last year
- Net income was $1.0 million, or $0.03 per share
- Cash position grew $21.1 million to $79.3 million
- Plans announced for ECLIPSE, the largest randomized coronary atherectomy trial
- Exclusive Japanese distribution agreement signed with Medikit Co., Ltd.
ST. PAUL, Minn.--(BUSINESS WIRE)--Cardiovascular Systems, Inc. (CSI) (NASDAQ: CSII), a medical device company developing and commercializing innovative interventional treatment systems for peripheral and coronary artery disease, today reported financial results for its fiscal second quarter ended December 31, 2016.
“Japan represents the world’s second-largest market for coronary interventions, with a large patient population suffering from calcified artery disease. Physicians in Japan understand the challenges of treating these lesions and they are seeking novel tools, like orbital atherectomy, to improve clinical outcomes for their patients.”
The company’s second-quarter revenues were $50.0 million, a 21% increase from the second quarter of fiscal 2016. Coronary revenues grew 51% over last year, while peripheral revenue increased 13%.
The second-quarter gross profit margin increased to 81.7% from 80.5% in the prior-year period, driven by unit cost reductions. Operating expenses in the second quarter were 18% lower than the prior year, reflecting management’s cost realignment initiatives, timing of studies and programs, and suspension of the medical device tax. Operating expenses were lower than forecast, due to timing of expenses and reduced legal fees.
Second-quarter net income was $1.0 million, or $0.03 per share, improving $16.2 million from a net loss of $(15.2) million, or $(0.47) per share in the prior-year period. Adjusted EBITDA was positive in the quarter at $4.6 million. Cash increased $21.1 million for the quarter, due to generation of $15.9 million of cash from operations, including a $10.0 million cash payment under the Medikit distribution agreement, and $5.6 million of proceeds from financing activities, related to employee stock programs.
Scott Ward, CSI’s Chairman, President and Chief Executive Officer, said, “Our revenue gains demonstrate that we are continuing to make progress in the transformation of our sales organization that began last year. At the same time, our cost realignment initiatives are driving us toward sustainable profitability. This resulted in our first quarterly profit and substantial positive cash flow this quarter. While we still have much to do, we are encouraged by our progress to date and look forward to building on our success, as we serve the large and growing unmet medical need for treating arterial calcium.”
ECLIPSE Designed to be Largest Randomized Coronary Atherectomy Trial
In November, co-principal investigator Dr. Philippe Généreux, interventional cardiologist at Morristown Medical Center, New Jersey, and director of the Angiographic Core Laboratory at the CRF Clinical Trials Center, presented the design of CSI’s new ECLIPSE clinical trial at the Transcatheter Cardiovascular Therapeutics (TCT) conference in Washington, D.C. The trial will compare CSI’s Diamondback 360® Coronary Orbital Atherectomy System (OAS) versus conventional angioplasty, including specialty balloons, for vessel preparation prior to drug-eluting stent (DES) implantation.
“The ECLIPSE trial reflects the growing complexity of coronary artery disease, or CAD, seen in the modern-day cardiac catheterization laboratory, and will be the largest randomized clinical trial to-date to assess the use of adjunctive coronary atherectomy for calcific coronary artery disease,” said Dr. Ajay Kirtane, director of the Cardiac Catheterization Laboratories at NewYork-Presbyterian/Columbia University Irving Medical Center, and co-principal investigator of the trial.
ECLIPSE will be a prospective, multi-center, randomized clinical trial of up to 2,000 subjects performed in up to 60 sites in the United States. Half the participants will receive orbital atherectomy prior to DES implantation, while the other half will receive conventional angioplasty, including specialty balloons, followed by DES implantation. The trial will be powered to demonstrate differences in the primary endpoints of post-procedural minimal cross-sectional area (assessed by intravascular imaging in a subset of up to 400 patients), as well as in the clinical outcome of target vessel failure at one year. The trial is expected to begin enrollment in spring 2017.
Medikit to be Exclusive Distributor of Diamondback 360® Atherectomy Systems in Japan
In November, CSI signed an exclusive distribution agreement with Medikit Co., Ltd., to sell its Diamondback 360® Coronary and Peripheral OAS in Japan.
Medikit is one of the world’s leading manufacturers in vascular access and interventional medical devices, especially hemodialysis and other catheters used by hospitals for coronary and peripheral interventions. Medikit’s Japanese sales channel includes 120 sales representatives selling products to over 800 hospitals that perform percutaneous coronary interventions. To secure exclusive distribution rights, Medikit made an upfront payment of $10.0 million to CSI.
In June, CSI submitted a Shonin application to Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) for approval of its Diamondback 360 Coronary OAS Micro Crown to treat severely calcified coronary arteries. The company anticipates commercialization beginning in the first half of calendar 2018. CSI also expects to pursue Shonin approval for its Diamondback 360 Peripheral Orbital Atherectomy System in the near future.
Said Ward, “Japan represents the world’s second-largest market for coronary interventions, with a large patient population suffering from calcified artery disease. Physicians in Japan understand the challenges of treating these lesions and they are seeking novel tools, like orbital atherectomy, to improve clinical outcomes for their patients.”
Fiscal 2017 Third-Quarter Outlook and Commentary
Ward said, “We anticipate third-quarter progress in revenue growth for both of our atherectomy franchises as our sales organization continues to refine its resource allocation, gain experience and clinical acumen, and build physician relationships. We also expect our focus on cost management to maintain strong gross margins and allow us to achieve sustainable profitable growth in the future, though quarterly variations will occur due to timing of expenses and projects. Operating expenses benefited from that timing in second quarter; however, we are expecting an increase in the third quarter to a more normalized level.”
For the fiscal 2017 third quarter ending March 31, 2017, CSI anticipates:
- Revenue in a range of $50.5 million to $51.5 million;
- Gross profit as a percentage of revenues of about 81 percent;
- Operating expenses of approximately $43.0 million;
- Net loss in the range of $(1.2) million to $(1.8) million, or loss per common share ranging from $(0.04) to $(0.06), assuming approximately 32.6 million average shares outstanding; and
- Positive adjusted EBITDA.
Conference Call Today at 3:45 p.m. CT (4:45 p.m. ET)
Cardiovascular Systems, Inc. will host a live conference call and webcast of its fiscal second-quarter results today, January 25, 2017, at 3:45 p.m. CT (4:45 p.m. ET). To access the call, dial (877) 201-0168 and enter the access number 47648849. Please dial in at least 10 minutes prior to the call. To access the live webcast, go to the events section of the company’s investor relations website, http://investors.csi360.com/Investors/Events, and click on the webcast link.
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