Cardiovascular Systems Reports Fiscal 2013 Fourth-Quarter and Full-Year Financial Results

  Cardiovascular Systems Reports Fiscal 2013 Fourth-Quarter and Full-Year
  Financial Results

 Conference Call Scheduled for Today, August 7, 2013, at 3:45 PM CT (4:45 PM

Business Wire

ST. PAUL, Minn. -- August 7, 2013

Cardiovascular Systems, Inc. (NASDAQ: CSII)

  *Revenues of $28.8 million rose 26 percent over the fiscal 2012 fourth
    quarter, and 9 percent sequentially over the fiscal 2013 third quarter

  *FDA questions were received on completed PMA application to treat coronary
    artery disease

       *CSI submitted responses to FDA on July 19, 2013

  *Coronary data from ORBIT II presented in late-breaking trial sessions at
    EuroPCR and C3 conferences

       *92.8 percent of patients free from severe angiographic complications
       *Final procedure mean residual stenosis 4.7 percent
       *Results exceeded trial’s primary safety and efficacy endpoints by a
         significant margin

  *Company began enrolling patients in Liberty 360° peripheral study

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 fourth
quarter and year ended June 30, 2013.

CSI’s fourth-quarter revenues rose to $28.8 million, a 26-percent gain from
$22.9 million in the fourth quarter of fiscal 2012. Substantial demand for the
company’s Stealth 360°^® peripheral arterial disease (PAD) System drove
Stealth 360° revenues to 99 percent of total device revenues. Customer reorder
revenues remained strong at 96 percent of total revenue.

CSI’s fiscal 2013 fourth-quarter net loss was $(6.8) million, or $(0.28) per
common share, compared to $(4.6) million, or $(0.24) per common share, in the
fiscal 2012 fourth quarter. Adjusted EBITDA for the quarter was a loss of
$(4.3) million, compared to a loss of $(2.5) million in fiscal 2012. Losses
increased from the prior year primarily due to planned investments, including
approximately $4.0 million to advance the ORBIT II coronary clinical trial and
prepare for a coronary market launch. Other investments included competitive
enhancements to sales and marketing, and expansion of medical education

The company’s fourth-quarter gross profit margin was 76 percent, compared to
77 percent in the year-earlier quarter. The favorable effect of increased
production volume was offset by higher unit costs of the Stealth 360° versus
its predecessor Diamondback 360°^® device, and by lower average selling

David L. Martin, CSI president and chief executive officer, said, “We had a
strong finish to the fiscal year, building significant momentum as we enter
fiscal 2014. Our easy-to-use and effective technology, combined with our
focused sales strategy, educational initiatives, and expanding wealth of
scientific data, are driving our strong year-over-year top-line growth in the
large and expanding $2.0 billion PAD market.”

“We remain steadfast in our goal of providing a superior solution to treat
arterial calcium, which is present in approximately 65 percent of all PAD
arteries treated and in nearly 80 percent of the small arteries treated below
the knee. In addition, our compelling ORBIT II study results and PMA
application progress with the FDA have us excited about the $1.5 billion
calcified coronary market opportunity and its future growth potential,” said

Full Fiscal Year 2013 Results
For the fiscal 2013 full year, revenues increased to $103.9 million, up 26
percent from the prior fiscal year. Gross margin was 77 percent, consistent
with fiscal 2012, while operating expenses rose 31 percent as a result of
planned investments. Net loss totaled $(24.0) million, or $(1.11) per common
share, versus $(16.8) million, or $(0.93) per common share, last year.
Adjusted EBITDA loss increased by $(5.6) million to $(14.0) million.

Said Martin, “Fiscal 2013 was a year of many accomplishments that the whole
CSI team can be proud of. We delivered very strong revenue growth, submitted a
key coronary PMA application to the FDA, expanded adoption-driving education
initiatives and continued our leadership in providing PAD scientific data on
our products. This sets the stage for further growth in the year ahead.”

Coronary PMA Submission Update
CSI completed submission of its PMA application to the FDA for the company’s
orbital atherectomy system to treat calcified coronary arteries on March 15,
2013. On June 14, 2013, the FDA provided CSI with its questions on the
application. CSI was able to quickly reply, submitting its responses by July
19. The company anticipates that approval could occur in late calendar 2013 or
early 2014, primarily depending on whether or not a full advisory panel is
required by the FDA.

ORBIT II Coronary Data Presented in Late-Breaking Trial Sessions
CSI presented 30-day results from its ORBIT II study of coronary artery
disease in late-breaking presentations at the 2013 European Association of
Percutaneous Cardiovascular Interventions (EuroPCR) conference in Paris, and
the 2013 Complex Cardiovascular Catheter Therapeutics (C3) conference in
Orlando, Florida. Dr. Jeffrey Chambers of Metropolitan Heart and Vascular
Institute, Minneapolis, highlighted data showing that 92.8 percent of patients
were free from severe angiographic complications. Additionally, core lab
assessed final procedure residual stenosis was 4.7 percent.

ORBIT II demonstrated that CSI’s technology produced clinical outcomes that
exceeded the trial’s two primary safety and efficacy endpoints by a
significant margin — within one of the most challenging patient populations to
treat. Results showed that at 30 days, patient freedom from major adverse
cardiac events, or MACE, was 89.6 percent and procedural success was 88.9
percent (including in-hospital MACE). Patients had less than 50 percent
residual stenosis 98.6 percent of the time, and 97.7 percent of stents were
successfully delivered. Previous studies of calcified lesions showed
significantly higher rates of MACE and death.

According to Dr. Chambers, “Patients who suffer from severely calcified
coronary lesions are one of the toughest-to-treat populations, and 30-day
ORBIT II results demonstrate that CSI’s orbital atherectomy technology may be
a practical treatment option. Patients with moderate-to-severe calcium are
more likely to experience MACE, or even death.”

For more information, click here.

First Patients Enrolled in Liberty 360° Study
During the fourth quarter, CSI began enrolling patients in its post-market
study, LIBERTY 360°. The study is evaluating the acute and long-term clinical
and economic outcomes of the company’s orbital atherectomy system in treating
PAD. It is the first study of its kind to compare orbital atherectomy to all
other PAD interventional treatment options in a difficult-to-treat patient
population. As a prospective, observational, multi-center post-market study,
LIBERTY 360° will enroll up to 1,200 patients at 100 sites across the United
States, including 500 patients with claudication (painful circulatory
problems), 500 who suffer from critical limb ischemia (a severe form of PAD)
and 200 scheduled for amputation.

Martin said, “LIBERTY 360° is unique in that it’s assessing long-term outcomes
and durability in a patient population that includes complex cases, even those
with advanced and severe PAD — a subset that hasn’t been studied before. CSI
is dedicated to providing physicians with the information they need to make
sound treatment decisions for their patients. LIBERTY 360° is the latest
example of that commitment, and we’re looking forward to the data and insights
it will provide.”

For more information, click here.

Fiscal 2014 First-Quarter Outlook
For the fiscal 2014 first quarter ending September 30, 2013, CSI anticipates:

  *Revenue growth of 18 percent to 22 percent over the first quarter of
    fiscal 2013, to a range of $27.5 million to $28.5 million, including the
    effect of lower expected procedure volumes during the summer;
  *Gross profit as a percentage of revenues slightly higher than the fourth
    quarter of fiscal 2013;
  *Operating expenses approximately 9 percent higher than the fourth quarter
    of fiscal 2013, including approximately $6.0 million for the ORBIT II
    trial and preparation for a potential future coronary market launch;
  *Interest and other expense of approximately $(300,000), excluding the
    potential effect of debt conversions or valuation changes of the related
    conversion option asset; and
  *Net loss in the range of $(9.6) million to $(10.2) million, or loss per
    common share ranging from $(0.39) to $(0.42), assuming 24.5 million
    average shares outstanding, and excluding the potential effect of debt
    conversions or valuation changes of the related conversion option asset.

Concluded Martin, “CSI is committed to helping physicians successfully address
the most difficult disease states, including arterial calcium, given the
complications it presents for the millions who suffer from PAD and CAD. We do
this through clinical rigor, constant innovation, and a defining drive to set
the standard in safe, effective and economical medical devices that improve
patient outcomes. Our fiscal 2014 focus is twofold: We will continue to
prepare for a coronary launch, making growth investments as appropriate, while
driving clinical and educational initiatives for further PAD adoption.”

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 fourth-quarter results today, August 7, 2013, at 3:45 p.m. CT (4:45
p.m. ET). To access the call, dial (888) 679-8034 and enter access number
39331740. 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,, 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 41201456. The audio replay will be available beginning at 5:45
p.m. CT on Wednesday, August 7, 2013, through 11 p.m. CT on Wednesday, August
14, 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, nearly 120,000
of CSI’s devices have been sold to leading institutions across the United
States. CSI has also completed 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

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 and the anticipated timing
of FDA approval; (ii) the $1.5 billion estimate of the market for a coronary
application and its future growth potential; (iii) CSI’s LIBERTY 360° study;
(iv) potential future growth of CSI; (v) anticipated revenue, gross profit,
operating expenses, interest and other expense, and net loss; and (vi) CSI’s
fiscal 2014 focus, 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 and
study 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 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, 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)

                 Three Months Ended                Year Ended
                   June 30,                            June 30,
                   2013            2012               2013            2012
Revenues           $ 28,821         $ 22,907           $ 103,897        $ 82,490
Cost of goods       6,929          5,178            24,382         19,216     
Gross profit        21,892         17,729           79,515         63,274     
general and          24,627           18,474             86,718           66,366
Research and        3,946          3,241            15,216         11,374     
Total expenses      28,573         21,715           101,934        77,740     
Loss from            (6,681     )     (3,986     )       (22,419    )     (14,466    )
Interest and
other               (160       )    (619       )      (1,618     )    (2,324     )
Net loss           $ (6,841     )   $ (4,605     )     $ (24,037    )   $ (16,790    )
Net loss per
common share:
Basic and          $ (0.28      )   $ (0.24      )     $ (1.11      )   $ (0.93      )
average common
shares used in
Basic and           24,181,465     18,909,220       21,685,932     18,035,635 

Cardiovascular Systems, Inc.
Consolidated Balance Sheets
(Dollars in Thousands)

                                             June 30,   June 30,
                                               2013           2012
Current assets
Cash and cash equivalents                      $  67,897      $  35,529
Accounts receivable, net                          14,730         13,644
Inventories                                       6,243          7,061
Prepaid expenses and other current assets        959           1,536
Total current assets                             89,829        57,770
Property and equipment, net                       2,999          2,163
Patents, net                                      3,219          2,635
Other assets                                     850           556
Total assets                                   $  96,897      $  63,124

Current liabilities
Current maturities of long-term debt           $  5,095       $  4,678
Accounts payable                                  7,230          5,610
Deferred grant incentive                          156            302
Accrued expenses                                 9,932         7,262
Total current liabilities                        22,413        17,852
Long-term liabilities
Long-term debt, net of current maturities         7,472          12,842
Other liabilities                                180           241
Total long-term liabilities                      7,652         13,083
Total liabilities                                30,065        30,935
Commitments and contingencies
Total stockholders’ equity                       66,832        32,189
Total liabilities and stockholders’ equity     $  96,897      $  63,124

Cardiovascular Systems, Inc.
Supplemental Sales Information
(Dollars in Thousands)

                    Three months ended          Year ended
                   June 30,                    June 30,
                   2013         2012         2013          2012
Device revenue      $ 25,375    $ 20,174    $ 91,238     $ 73,016 
Other product        3,446      2,733      12,659      9,474  
Total revenue       $ 28,821    $ 22,907    $ 103,897    $ 82,490 
Device units sold    8,138      6,293      28,948      22,982 
New customers        59         49         191         172    
Reorder revenue %    96     %    96     %    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)

                     Three Months Ended          Year Ended
                     June 30,                      June 30,
                     2013         2012         2013          2012
Loss from            $ (6,681 )   $ (3,986 )     $ (22,419 )   $ (14,466 )
Add: Stock-based       2,126          1,246          7,442           5,165
Depreciation and      285        196        973         872     
Adjusted EBITDA      $ (4,270 )   $ (2,544 )   $ (14,004 )   $ (8,429  )

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

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

  *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

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.


Cardiovascular Systems, Inc.
Investor Relations, 651-259-2800
Padilla Speer Beardsley Inc.
Marian Briggs, 612-455-1742
Matt Sullivan, 612-455-1709
Press spacebar to pause and continue. Press esc to stop.