Cardiovascular Systems, Inc. Reports Fiscal 2018 Second-Quarter Financial Results

Conference Call Scheduled for Today, February 7, 2018, at 3:45 PM CT
(4:45 PM ET)

• Revenues of $52.6 million increased 5% from second quarter last year
• Net loss was $(0.4) million, or $(0.01) per basic share
• International expansion begins with commercial launch of CSI’s
  coronary device in Japan
• Rhonda Robb joins company as new Chief Operating Officer
• Company to distribute OrbusNeich balloons and ZILIENT™ guidewires

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, 2017.

The company’s second-quarter revenues were $52.6 million, an increase of
$2.6 million from the second quarter of fiscal 2017. Gross profit margin
rose to 81.9% from 81.7%, driven primarily by unit cost reductions.
Operating expenses increased $3.6 million to $43.4 million, driven
primarily by the expansion of the sales force with additional clinical
specialists and increased ECLIPSE clinical study activity.

Second-quarter net loss was $(0.4) million, or $(0.01) per basic share,
compared to a net income of $1.0 million, or $0.03 per share, in the
prior-year period. Adjusted EBITDA was positive in the quarter at $3.4
million.

Scott Ward, CSI’s Chairman, President and Chief Executive Officer, said
“We are encouraged that the adjustments we made to our sales model last
quarter resulted in 6% sequential revenue growth. However, we believe
that the ramp in productivity from the recent addition of 45 clinical
specialists may take longer than we anticipated in October. As a result,
we now forecast fiscal year 2018 revenue to be in a range of $215
million to $219 million.”

Added Ward, “During the second half of the fiscal year, we forecast
continued attractive sequential quarterly revenue growth, due to
improving sales productivity, our commercial launch in Japan, and the
limited market release of OrbusNeich angioplasty balloons and ZILIENT™
guidewires.”

International Expansion Begins with Commercial Launch of Coronary
Device in Japan
On February 1, CSI announced that it had
commercially treated the first patient in Japan with its Diamondback 360®
Coronary Orbital Atherectomy System Micro Crown (Micro Crown).

CSI received PMDA approval for the Micro Crown in March 2017 and
reimbursement approval effective February 2018. Medikit Co., Ltd. is
CSI’s exclusive distribution partner in Japan. With a controlled launch
now underway, CSI expects to complete an initial Micro Crown stocking
order during its third fiscal quarter and open approximately 15 accounts
by the end of the fiscal year.

Commented Ward, “We are excited to bring orbital atherectomy
technology to Japan. Of the 280,000 Japanese patients who undergo
percutaneous coronary procedures each year, 10-20% have severely
calcified coronary lesions. The introduction of Micro Crown gives
physicians in Japan a cost-effective treatment option for this
difficult-to-treat patient population.”

Rhonda Robb Joins Company as Chief Operating Officer
On
January 25, CSI announced the appointment of Rhonda Robb as Chief
Operating Officer. Robb held leadership positions at Medtronic for 30
years, most recently serving as Vice President and General Manager of
the Heart Valve Therapies business. She has strong experience leading
complex businesses and growing new markets, extensive commercial
experience, and a strong track record of building teams and product
portfolios that have improved the quality of care for patients with
cardiovascular disease.

“Rhonda is a dynamic and talented executive with extraordinary
experience in driving innovation and growth in medical technology,” said
Ward. “She has the leadership ability to further build CSI and help us
achieve our ambitious growth goals.”

CSI Expands Product Portfolio to Further Support Peripheral and
Coronary Interventions
On January 18, CSI announced two new
partnerships broadening the company’s product portfolio. CSI is now the
exclusive U.S. distributor of OrbusNeich balloon products. Additionally,
the company has signed an original equipment manufacturer (OEM)
agreement with Integer Holdings Corporation for CSI-branded ZILIENT™
guidewires.

The company anticipates OrbusNeich’s full balloon product portfolio will
become available throughout 2018 and 2019. The broad market launch of
the CSI-branded ZILIENT peripheral guidewires is expected to begin later
in the current fiscal year. CSI anticipates that additional ZILIENT
guidewires for coronary interventions and radial peripheral
interventions will be available in the future.

Ward added, “We’re increasing the value and expertise that we bring to
physicians and patients by expanding our product portfolio in the key
areas where CSI excels. While we don’t anticipate a material top-line
impact in fiscal 2018, we’re excited about the long-term growth
potential from these new partnerships.”

Fiscal 2018 Third-Quarter and Full-Year Outlook and Commentary
Ward
said, “Second-quarter revenues improved, compared to first quarter, due
in part to our decision to flex our sales model. Allocating
approximately 20 of our sales reps to our coronary franchise helped
restore growth and add new account revenue. However, the productivity
ramp from the additional 45 clinical specialists fell short of our
expectations. We now anticipate that productivity during the second half
of the year will be lower than we forecasted in October. As a result, we
now expect Fiscal Year 2018 revenues in the range of $215 million to
$219 million.”

For the fiscal 2018 third quarter ending March 31, 2018, CSI anticipates:

• Revenue in a range of $55.0 million to $56.5 million;
• Gross profit as a percentage of revenues of about 81.0%;
• Operating expenses of approximately $45.5 million;
• Net (loss) income in the range of $(0.9) million to $0.0 million, or
  net (loss) earnings per common share ranging from $(0.03) to $0.00,
  assuming approximately 33.2 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, February 7, 2017, at 3:45 p.m. CT (4:45
p.m. ET). To access the call, dial (833) 241-7255 and enter the access
number 5274737. 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, https://investors.csi360.com/events-and-presentations/events-calendar/default.aspx,
and click on the webcast link.

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 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.

Millions of patients with PAD may benefit from treatment with orbital
atherectomy utilizing the Stealth 360® and Diamondback 360®
Peripheral Orbital Atherectomy Systems, 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 Coronary Artery Disease (CAD)
CAD is a
life-threatening condition and a leading cause of death in men and women
in the United States. 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 nearly 40% of patients undergoing a percutaneous
coronary intervention (PCI). Significant calcium contributes 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 Systems
treat calcified and fibrotic plaque in arterial vessels throughout the
leg and heart 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 the first
510(k) clearance for the use of the Orbital Atherectomy System in
peripheral arteries in August 2007. In October 2013, the company
received FDA approval for the Coronary Orbital Atherectomy System. To
date, over 356,000 of CSI’s devices have been sold to leading
institutions across the United States. For more information, visit the
company’s website at www.csi360.com.

About Integer Holdings Corporation
Integer Holdings
Corporation, is one of the largest medical device outsource (MDO)
manufacturers in the world serving the cardiac, neuromodulation,
orthopedics, vascular, advanced surgical and power solutions markets.
The company provides innovative, high quality medical technologies that
enhance the lives of patients worldwide. In addition, it develops
batteries for high-end niche applications in energy, military, and
environmental markets. The company's brands include Greatbatch Medical,
Lake Region Medical and Electrochem. Additional information is available
at www.integer.net.

About Medikit Co., Ltd.
Established in 1973 and based
in Tokyo, Medikit Co., Ltd. is a global medical technology company and
is publicly-traded on the JASDAQ exchange (JASDAQ: 7749). Medikit’s
mission is to deliver the highest standards of excellence in operating
as a health care company whose products and services help to enhance
healthy lives by minimizing unnecessary suffering and death from
disease. Medikit is a market leader in interventional products including
vascular access devices such as hemodialysis catheters, intravenous
catheters, sheaths and guiding catheters. Medikit products are sold
in Japan, the United States and over 30 other countries. The company has
R&D and manufacturing capabilities in Japan and Vietnam with more than
1,300 consolidated employees. For more information, visit the company’s
website at www.medikit.co.jp.

About OrbusNeich
OrbusNeich is a global pioneer in the
provision of life-changing vascular solutions and offers an extensive
portfolio of products that set industry benchmarks in vascular
intervention. Current products include the world's first dual therapy
stents, the COMBO Plus and COMBO Dual Therapy Stents, together with
stents and balloons marketed under the names of Azule™, Scoreflex™,
Sapphire™ II, Sapphire™ II PRO and Sapphire™ II NC, as well as products
to treat peripheral artery disease: the Jade™ and Scoreflex™ PTA
balloons. OrbusNeich is headquartered in Hong Kong and has operations in
Shenzhen, China; Fort Lauderdale, Florida, USA; Hoevelaken, The
Netherlands; and Tokyo, Japan. OrbusNeich supplies medical devices to
physicians in more than 60 countries. For more information, visit www.OrbusNeich.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) continued
sequential quarterly revenue growth due to improving sales productivity,
the commercial launch in Japan, and the limited market release of
balloons and guidewires; (ii) the commercial launch in Japan, including
the anticipated timing thereof, and the opportunity in Japan; (iii) our
growth goals; (iv) the future impact of adding balloons and guidewires
to CSI’s portfolio; (v) the specific products to be offered by CSI; (vi)
the timing of market launches and availability of balloons and
guidewires; (vii) the financial impact and growth potential of the
addition of additional products and geographies; and (viii) anticipated
revenue, gross profit, operating 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, regulatory developments in the
U.S., Japan and other foreign countries; FDA and similar Japanese and
other foreign clearances and approvals; approval of our products for
distribution in Japan and other foreign countries; 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; our ability to maintain
third-party supplier relationships and renew existing purchase
agreements; our ability to maintain our relationship with our
distribution partner in Japan; the experience of physicians regarding
the effectiveness and reliability of CSI’s products; 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; 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;
issues relating to our saline pump recall; the impact of federal
corporate tax reform on our business, operations and financial
statements; general economic conditions; 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
The Stealth 360® PAD System
and Diamondback 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. 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.

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
before performing Diamondback 360 Coronary OAS procedures 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.

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 following table.
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.

Contacts

Cardiovascular Systems, Inc.
Jack Nielsen, 651-202-4919
j.nielsen@csi360.com
or
Padilla
Matt
Sullivan, 612-455-1709
matt.sullivan@padillaco.com

Read full story here