Cardiovascular Systems Inc. (CSII)
F3Q10 (Qtr End 03/31/10) Earnings Call
May 05, 2010 04:45 pm ET
Larry Betterley - CFO
Dave Martin - President and CEO
Matthew O'Brien - William Blair
Ernest Andberg - Feltl & Company
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Good day ladies and gentlemen and welcome to the Quarter 1, 2010 Cardiovascular Systems earnings conference call. I will be your operator for today. At this time all participants are in a listen only mode. Later we will conduct a question and answer session. (Operator Instructions) I would now like to turn the conference over to your host for today, Larry Betterley, Chief Financial Officer. Please proceed.
Good afternoon and welcome to our fiscal 2010, third quarter conference call. Before we begin I would like to remind you that during the course of this call we would make forward looking statements.
These forward looking statements are covered under the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding CSI’s future financial and operating results or other statements that are not historical facts.
Please be advised that actual results could differ materially from those stated or implied by our forward looking statements due to certain risks and uncertainties including those described in our most recent Form 10-K and subsequent quarterly reports on form 10-Q. We suggest that you read these and other future filings that we may make with the SEC.
CSI disclaims any duty to update or revise our forward-looking statements as a result of new information future events developments or otherwise. We will also refer to non-GAAP measures because we believe they provide useful information for our investors.
Today’s news contains a reconciliation table to GAAP results. I will now turn the call over to Dave Martin CSI’s President and CEO for comments.
Thanks Larry and hello everyone. In fiscal 2010 we have five priorities, they are first, driving adoption in our existing accounts through customer education on the optimal protocol for the Diamondback 360 and increasing volumes in patient procedures below the knee.
Second, launching ORBIT II our pivotal clinical trial to evaluate our technology for using calcified coronary lesions this is a new market opportunity for CSI.
Third building a foundation of quality evidence staged data to confirm the clinical utility of the Diamondback 360 intruding peripheral arterial disease including advancing COMPLIANCE 360, CALCIUM 360 and additional clinical trials.
Fourth introducing new versions of the Diamondback 360 to improve EBIT use for physicians and enhance the price effectiveness throughout the patient’s leg.
And finally balancing revenue growth and operating expenses to achieve profitability and positive cash flow. We will operate out amounts on these areas later in the call.
Turning now to CSI’s fiscal third quarter financial performance. Revenue of $16.5 million was up 9% over both the year ago period and sequentially from the second quarter of this fiscal year.
This was in line with our expectations balancing revenue growth with expense management resulted in a reduction in our loss compared to last years third quarter. The net loss improved 11% excluding income for preferred stock warrants and auction rate securities valuation changes a year ago.
During the third quarter, we made significant headway in educating our physician customer base in the optimal protocol for using the Diamondback 360 to safely change lesion compliance by removing hardened plaque while minimizing damage to the arterial wall and therefore preserving medial integrity.
As a result, we are seeing improved patient outcomes in greater product usage of targeted accounts. Newly targeted accounts this quarter grew 13% sequentially over the fiscal second quarter.
While targeted accounts we focused on the second quarter continue to go as well. We're expanding this effort to additional accounts going forward by focusing on superior outcomes and increased usage of our current accounts base rather than broader account penetration we’re building on little customer base at sustainable revenue growth for the future.
Diamondback 360 treats plaque throughout the leg and addresses many limitations of other treatments. In just over two and half years since the commercial launch the Diamondback system has been used in more than 25,000 cases.
At this early stage, we’ve captured the number one or the number two share in the above the knee atherectomy market in each region of the United States. And we have a leading number one share in the below the knee market and across the country.
Our unprecedented safety profile means more patients upon the release and improved long-term outcomes with significant economic benefits. Traditions are adopting our technology as evidenced by increases of both hospital accounts and usage. We sold 4,870 Diamondback devices up from 4,559 in the third quarter last fiscal year, bringing the total number of devices sold nearly to 38,000 since the initial product launch.
The percentage of revenue generated for the orders increased to 93% for the fiscal 2010 third quarter, that’s up 84% in the year ago period reflecting our emphasis and driving adoption in existing accounts.
Now Larry will provide more details of our financial results. Larry?
Thank you Dave. For the third quarter of fiscal 2010 compared to 2009 revenue grew to $16.5 million which was 9% increase over last year. Diamondback device sales continued to generate most of our revenue at 88% of the total.
Other products revenue grew more than $600,000 from sales of our vibrant product line and distribution partner products which have been introduced over the last year.