Cardiovascular Systems (CSII) 3 Nov 222023 Q1 Earnings call transcript

Hello, everyone, and welcome to the Cardiovascular Systems, Inc., Fiscal 2023 First Quarter Earnings Conference Call. My name is Seth, and I'll be the operator for your call today [Operator Instructions].

I will now hand the floor to Jack Nielsen, Vice President of Investor Relations. Please go ahead.

Thank you. to 'XX welcome call. quarter and morning, our first fiscal conference Good me CSI Jeff Officer; Officer. Ward, are Points, President, Financial With Scott Executive Chairman, today and Chief Chief and financial a release issued we morning, this announcing Early first-quarter results. press

You may release Investor section Relations of our website. on corporate the of a find copy this

earnings also additional that details on you may supplement outlook. Here, our find an includes performance and

our and and Act call, operating of that historical of which Form the on on future XX-K or Litigation will Form from statements the result forward-looking business, XX-Q. risks uncertainties, uncertainties today's certain forward-looking most statements reports of Private prospects, quarterly CSI's or as pandemic statements provisions a this COVID-XX future or due those our we CSI update and regarding any results information, risks for subsequent make and and financial and we otherwise. our particular, those other are XXXX facts. results condition including in and Reform could events, duty will include revise Actual stated our created new statements During to differ to by has disclaims Securities or not implied results discuss materially developments, call. financial described In operations, recent

refer contains reconciliation table a we also believe results. our release press they to because will non-GAAP measures for to We Today's provide useful investors. information GAAP

Scott to I over will now the turn Ward. call

the you've earlier release morning, issued everyone, an that Good Jack. you review joining morning. today. you, thank press this had Thank for us opportunity to and Hopefully, we

X% growth international our consensus. ahead of state led support devices by pleased Worldwide strong We our in with the million, are coronary increased revenue $XX.X and of to expansion. and business really

million of efforts revenue, Scoreflex $X.X make to markets, in well, our progress International sales Canada. strong launch coronary, XX% helped drive $X.X balloon Asia our ISD of XX% and diversify Europe, grew continue during year, We product coronary an generating Japan, of revenue which scoring which increase over is key pipeline. over is The in really QX, the including to to broaden million. each going in with the our and in Pacific, great prior mostly growth

launched quarter, are countries in the X new U.S. orbital we and countries addition, we X,XXX to OAS we outside first XX atherectomy. now physicians the use during In where commercial have over trained in of

Worldwide was peripheral flat at $XX.X about revenue million.

to believe volumes, we continue patients in hospitals gradually staffing While particularly lower is with situation impact improving, procedural the quantitation. sporadic for acuity peripheral shortages intermittent

of of our sales Our through revenue been the accelerate very procedure leverage our strategy force presence and the per sale to ISDs has successful.

expands our revenue for and of $XXX launched luminal X.X our in by delivered atherectomy year October, to per Importantly, incremental mixed on device we This peripheral procedure QX. knee. gain lesions we per remain In end. Max delivers expand, exceptional peripheral track that OAS. peripheral We treated the morphology fiscal revenue can be $XXX above and Crown the orbital to lesions from continued procedure ISDs in achieve with

sales. OAS the accelerate peripheral future X.X growth will We expect in Max

trained us solid these our results, solid demonstrate metrics contracts like expectations throughout performance indicators in to customers revenue for QX again new and accounts, of continued year. addition Each new In once leading products demand QX. our the momentum position and new exceeded for

this hospital are performed note, in payment positive payment Earlier outpatient procedures and rules, environment endovascular the our setting. expectations. ambulatory ambulatory surgery schedule, coronary atherectomy physician stable a reimbursement and for will anticipate peripheral X.X% for On a increase all outpatient classification procedures procedures and with of for a atherectomy fee line in week, final X.X% CMS that we hospital released our which Finally, in XXXX. rates, were center

impact weighted performed company across in in decrease for our increase total, tilting of CMS for is CSI reimbursement service. X.X% and all rules anticipated, procedures of X.X% in atherectomy in results in labs. final a an XXXX sites As the office-based favorable In

Now Jeff provide Points first-quarter financial our will Jeff. additional our results guidance. and details regarding

good and first our quarter with review comments will begin everyone. prepared you, brief a morning, I Thank my financial Scott, of results.

noted, QX X.X% compared As compared revenue $XX.X million Scott QX. revenue to of and year X% represented represented last to a growth decrease

in a August revenue procedure that approximately July is is QX the lower coronary quarter X% to time reminder, typically worldwide to As X% while lowest frame. sequentially, the peripheral than X% approximately of due QX. lower revenue declined declined revenue our This our and worldwide level, a in fiscal typically first volumes quarter seasonality year results sequentially. At high revenue X%

results revenue trends. year. quantitative our last generally discuss line I of comparisons will QX given our in seasonality now QX to expectations with So were historical

For please to supplement details, on website. deck refer our slide the additional earnings

volumes, peripheral to and related impact In less First decreased the we hospital lingering X%. revenue U.S., were some quarter site approximately worldwide revenues procedure than peripheral at expect staffing $XX.X on of staffing flat franchise million. peripheral shortages continue weigh the service. in to Hospital

a understaffing service. The cases quarter. units which hospitals the totaled and peripheral the while hospital XX%, in increased from Notably, increase be of revenue, decreased peripheral OBL some ISD accelerating U.S. may to X% of $X.X hospitals units cases causing is benefited in XX% the migration million. revenue deferral the in from OBL-sided

the IVL are use atherectomy use preparation into support $X.X stabilization. And of shortages of and balloons revenue X% increased but aforementioned by launch U.S., vessel for coronary balloons, signs NC. increased of depressed staffing of million. and to and to showed compared lanes. last by $XX.X recent X-millimeter increased revenue XX% Scoreflex led treatment angioplasty revenue of coronary million, for OAS adoption worldwide Coronary units quarter, was are swim seasonality. continued primarily Coronary In third-party decreased the $XX.X period while year, there volumes this data scoring XX% the the the we we quarter Sapphire the orbital sorting algorithms for driven product believe First physician procedure Increasing X% million. believe to to the

that increased XX% mind, treatment to our With continued the rebound the in staffing Europe. these as in factors revenue revenue quarterly continues will Outside as of QX improve. are Japan OAS $X.X anticipate coronary strength million to U.S., a algorithms result and hospital and adopted in we

Turning OBL margin international, by XX%. ISD, to expenses. relative an impacted to seasonally QX. experienced revenues and Margins were increase OES negatively volumes in as Mix was Gross profit in we lower hospital

Additionally, increased to freight pressures. experience inflationary associated we continued costs with

We year. increased challenges throughout million, totaled inflationary expect quarter with sequentially of and R&D we the securities $XXX SG&A participation. profit resumption results we In the an expenses conference the gross $X.X in and to primarily with cash $XX.X expenses increase Operating QX margin million increased to related consistent increase activity in-person of Although our marketing to balance million. long-term marketable do expect persist, the fiscal due of X%. expectations. were borrowings. decreased to no X%, to ended total,

our market We momentum, as As X% outlook. guidance. new recovery, $XXX procedure the our dynamics product million, assumes execution, We drive August, U.S. environment a of result, impact remains fiscal improvement our so with commercial over noted improving volumes hospital that uncertain introductions, gradual 'XX million a annual and unsettled XX% range macro we international expansion representing Again, $XXX guidance that current persist year. may continued the combined the I could know market growth. a revenue the to will are to in of to financial believe reiterating competitive our in course

bottom will our remarks. that anticipate and we time, will progress this line we the top now sequentially as fiscal each financial results, at on provide throughout year. both invite Scott. Scott closing improve the to However, I quarter his

Thank you, Jeff.

revenue guidance. fiscal we 'XX ahead, our confident in are looking So

the QX. Our the is launch assumes our the Crown, guidance support range. and commercial our and in revenue growth balloons we the delivered momentum XX% of business X.X Max in and mid-single-digit improved flex ISD of that are JADE international can XX% With confident competitive product growth sale momentum in driving continued and we mid-XX% the execution, in growth deliver

domestic is fiscal success we international with in months expected ISD OIS drive our Continued sales fiscal confident growth. the X to less remain our year, And in remaining business forecast. and revenue than 'XX in

our pleased product strong continued our to key we Turning milestones. that development I'm pipeline. to make progress share have against to

schedule ECLIPSE most later patients coronary OAS. on to anticipate likely at the enrolled, completing now continue trial fiscal X,XXX file QX, coronary to continue in readout solid in year with to data, our make our XXX(k) this 'XX. for calendar clinical and we study this With over we progress for our TCT completing of are We submissions microcatheters towards the

for Our have the trial the thrombectomy IDE FDA program to is prepare they Nova our is regarding partner in progressing and to clinical schedule Vascular, and plan, with to and the design. beginning the discussions initiated Nova on remains submit

achieved. were to to primary stage clinical report Our balloons the also trial drug-coated Knowledge, favorably endpoints at in drug-coated continued program balloon This comparison are performed and for everolimus-coated completed we recently the that pleased early the first-in-human for drug-coated this balloon the study coronary indication, development. other of has

enrollment the completed in peripheral CVT expect and In addition, trial, next to results review those spring. patient we

the also on track. DCB So remains program

circulatory to program. fiscal finally, The in program. last Turning development continue mechanical feedback clinical 'XX. FDA support were we presubmissions these and the FDA, peripheral to our the we and intend coronary to from month IVL completed pending trials our of initiate advance And

clinic the Overall, the impressive to feasibility of process preparing we to and submission 'XX. for continue QX testing report. regulatory additional in as an are in We fiscal perform to quarter reenter development human IDE to prepare

lithotripsy, customers we drug-coated on would from we Markets progress Day opportunities thank while remain now and and exceptional our addressable balloons like with made continued all striving CSI expand billion of mechanical for stable, you to we expansion. circulatory for will in total As our our intravascular questions. we support the take dedication deliver patients. your like are over projects your billion years, noted thank we Capital to and standard to about we next at $X.X meaningful as advance I employees which and their today to thrombectomy, August, $XX.X in X to and CSI, in our I our also interest continued of care the international support, would market pipeline

those appreciate it. you Thank if So repeat could instructions, operator, I'd you. please

is first Our Instructions] Nephron Pasquale from [Operator question from Chris Research.

to the as margin mix shift the like around of math just does were quarter. the digits continues ASPs question over one that had stays your these Is And this the support OAS to balance maybe talked if improving I it in procedural products? down do look about pricing single business, year gross negative you peripheral and high correct? we

So yes, correct to a about do Jeff, I'm reduction. Points to rest respond ASP the address to of want to And that in you the moment. just going have Jeff you're But that?

We kind solely a year. bit in Hospital remain was of our price the higher with very, very erosion. little OBL ASPs prior see consistent space. really That did

at bit looking range. I we it of little QX, you're high think the stabilized But where think to in we QX and stabilize started we is really I that comparison ASP to think I that to year-over-year kind continue sequentially as from see over I has single-digit look the that kind of kind OBL was stabilize, a of higher time. here to expect to and started think

part, continues to like your It Just margin that just setting there second you the deal accounts on of relatively on pathway well are to shift going with reimbursement if from are follow-up there seems hearing products? going to these actually to could they're that terms in improvements mix in the piece, the seeing done a non-OIS another some of talk And gross your considering we how pressure. payment the What has forward? rates. of you as OBL about some reduction

question, take first We the increase the gross Chris, sequentially. me let expect first to do about part of that Yes, margins.

throughout we of kind revenue. be a business a expect of kind year from the of here, bigger OES standpoint, mix our of part our go increase core kind we As to

from facility. and expect of we in increase with and of improvement. quarter always slowest both is to gross that higher the through coronary as overall volumes, our hospital, grows, margins kind in OIS QX standpoint. the have core margin goes think see course, a kind in And Of I our our just But seasonality generally, we business peripheral, it

as will well. the side that think help indirect I on

rates the OBL I'll second half the reimbursement, expected. payment The the payment rates the have it question where setting. was Chris, come in that out exactly And of regarding address

office-based fee who who in office-based recently about I In no fact, customers over last focus interestingly, Veeva practices for labs inventory our labs anyone. accommodate the And And comes on either office-based started fee night speak in largely to customers, had real this physician are in But this. result, physician labs many a business have relates complex physicians reductions the of this the or procedures. schedule management that schedules. that that many of to these they opportunity there also procedures. to made just their as report And meeting our surprise reduction managing number operating time, by returned the from the increasing high-volume Largely, to perform been and with lot we reductions. of labs as more really those a in have of their adjustments cost better have of their

And our quite you in so impressively. business that our unit that I think increases. you can see And see continues to grow OBL

don't I trend are we're is to Now going to the we something continue. seeing hard the going really how to volumes predict it's just indicated really over Coming where coming be an our hospital watch to to patients out We that just to accelerated place. migration of taking of procedure going know have that's these and year. that this comments but setting from may in the OBL be COVID,

to you just throughout the something of the have update on to course that's year. we'll So continue

Needham next Michael Company. Our question from Matson, & comes

used? mix you wanted it's that could calcium the I Crown softer here, what maybe cases where about morphology it guess know mentioned limited have be of you Is couple where of are getting? calcium? with only in the I X.X plaque kind are of used but it to or even being seeing to Max you And just launch weeks a that I any launch. ask the without mixed kind into feedback really you

Yes, great you. question, Mike. Thank

the the limited Crown is going segment with physicians where plaque greatest X.X So soft is actually release, expectations have we combination there in the more we're product that mixed above-the-knee are plaque. plaque. did that patients calcified we as have And impact or a more where This market very device -- is our our where treating has exceeded pleased that to this MAX launch. where our is of and market

to larger that plaque where to take going to place burden. begin And share the be this a where in segment. We see is utilized is expect to actually this product other market there's

very if product we heavily occluded if Their physicians any be converting above of the has the above-the-knee capital to our over vessels already work to this know was a physicians So had indicating And how use, they that require couple had use of feedback because simple past plaque, the we limited exceptional. together on effectively. knows are to to to at practice on of to actually how equipment. release a it. days, product the this -- know there's that and knee over that how Many have course meeting easy this participated to they're lot it. would use trained They're it, pretty in the this bringing mixed market use It's a it's Veeva just staff They it. doesn't proven of on orbital atherectomy. the OBL-cathlabs,

So how for our we can product to have high expectations contribute OAS this growth. peripheral

other your similar And peripheral or… pricing Crown is to the products

is. it Yes,

balance And one then wanted the ask I sheet. just as follow-up, to about a

is And math Anything about -- looks last of kind or capital kind from what of in decreased down quarter. that go unusual, right? million $XX anything there Is right, my one-offs by it any to cash that any So increases maybe. caused there? if were that like your working

in Mike, the a see usage cash we actually That's thanks of -- cash larger really for much question. always expected. what QX. We a kind

all as paid get pipeline the actually out all that we operations. We that that much and get Of to much we of largest decrease. annual and the think of what one I I ongoing quarter kind such. paid payments But to year, the from cash milestone will payments the operational-based. so of course, of payments be the related year-end, didn't it's was And throughout have It projects. expected, kind our for the Pretty too think really you'll the improve. go related see that really of was kind is

won't a You from of as cash business. much see the usage

Okay, got it.

that expect much just that for add would to business. I cash of the operating see course do that, not we year, to the utilization the of over

programs portfolio successful and as thrombectomy partners our milestone our be we our balloon continue we'll to spring as and on the payments well. good continue as our to drug-coated be then that's to program bring However, making news,

expect So the continue of reduce the our have to those over year. we payments course to do position cash

Our Suraj comes next Oppenheimer. question from from Kalia

stable of prepared those. mentioned in to ASPs, seeing was remarks, year. broad package something or in pockets? of lot indicated and so, a on certain And guidance let is was position your of competitive a in -- In a the any And of based your terms you seeing commentary competition, if get you Scott, me why? are accounts? perspective effect are Scott, questions you phrasing I'd your believe effect changing there had and your where the couple competitive trialing summer, I you Are love on compared utilization the change that there abating. to

really practice is calcified practice, a where get simply new where indications let's once to more to, normalized as have IVL The actually the have than course past And what over more use. OAS really treatment lesions, say, their in the has our algorithms into determine in months. adjusting seeing you they're being know, Those, use opportunity this after set has lesions accounts longer is physicians again, our that can't for typically the to balloons incorporate accounts balloon probably how trialing more lesions seeing to been had used of severely now in stabilization you of calcified of X months concluded and just occurring their to to a we're opportunity and practice. we're cross. Where have the been technology their the X had IVL treat tight for reduced

now normalized use think, normalized product. kind a happening, that of expect I seeing deploy And is I like sites towards they of the more a are for moving treatment algorithm a indications for more our indicated, over kind more at that time. to would that we're So to return

it. seeing of in that the our recovery We're So really rebound cases. the driving what is is just

Scott, and I'll hop back together in and see my queue. last two questions

So love OBL especially your IVL migration your contrast we sales setting. Scott, rep going productivity reps, it's thoughts get in the an -- given a beginning at could terms number given question, reps the you almost and you And if maybe to second Would also and in of the is accelerated compare to about of 'XX, on my today? Scott, outlook, setting. mentioned OBL are to of sales reimbursement get where

the and from perspective? great. there OBL color is for how an tackling questions. taking my blocking you So Any be Thank would

So our over our number the deployed field the the that -- really course changed. of past in We, the of sales in sustained have approximately marketplace sales reps really that X years, have we quota-bearing representatives over XXX time. have in not

also that specialists of and support of that we number specialists -- those with group do and going clinical channel, We that our clinical expect change, to forward. we maintain a

to quarter, of this, terms earlier In as patients hospital the migration of to an the response past in question, migration I OBL. these in we in the to indicated from particular, this OBL, setting seeing the are

is early that it's that trend continue say pace. that too indicated, think to a we'll I But at as that, it's watch. would something continue to this I

update IVL that course, the do of In the reimbursement the I on approval the revision dependent on that lower that upon of terms And setting, the for process. not of OBL completion codes. CPT of have the an progress you revascularization is of extremity of in

XXXX. and proven Our be understanding been But I recalcitrant. of as you kind to environment in think ever-changing that approved codes pretty has those has be know, revised now that may a is that

of Mathew from Our Blackman next question Stifel. comes

with out quarter the Scott or more And one exited million. sort you're XQ $XX you how of whether color million, so any quarter on $XX and consensus I've is the how Jeff, just got played comfortable follow-up. month-to-month,

much very thank Matt, that. you for

that Jeff in labs. seasonality. the by indicated really QX his of see always cath not performing to that And a many has we is that's quarter across are exclusive I procedures As cardiovascular in mean comments, is marked companies CSI. that

we're So of different rest market. no than the that

we at look performed, is course, how Now of year-end June. if in our we

momentum in always to expect July we but strong that were some September September So of pleased see was was that in we recovery kind to see really and a there. the momentum, see

we momentum in we've And September, this that So progressed month continued we've real had seen a we're strong as quarter. also with and that. pleased into

you of want the recommend, In do you to guidance terms that. comment that Jeff, on

plan our each we of I certainly products. sequential in So of mean, for really improvement kind

kind is I So think, out think that is of appropriate, consensus I the there, Matt.

the you a the cases percent quick larger one then you address just us access incremental of remind now Max. on just what with And before? that X.X necessarily Can couldn't you can count opportunity of

this more competitors about some in is large the calcified segment This participate a the of in above it's in it's that the of to a focus on haven't market obviously participated fairly knee, and market $XXX is severely lesions. our for the And million probably Yes, unabated the have market. time. had that technology other we opportunity because market the these a

So no definitely orbital I that's really as a no equipment. there's great opportunity said for atherectomy, There's us. is it because required. customer earlier, capital And training

are reps sales specialists. clinical Our

launch to to our positioned of product and contributions the well have make remainder year. over this growth it important we're So this

of is next Our from Jayson Raymond James. question Bedford

in hospital idea a Just the point put to on in of you Maybe much the OBL us versus channel? how peripheral from a an your business of is breakout give just OBL coming couple. Can peripheral. finer just

two and Jayson, comes the device revenue about third come from peripheral the from of hospital. a about third our OBL

just And that context, last year? was Jeff, for where

million OBL Actually, pretty actually We're consistent with the was the last in OBL. $XX year.

from year. last slightly So increased actually

quarter to stronger, mix international revenue with respect different the the meaning reiterated but and a little just And you mix. expected, was annual than your in support the was we revenue guidance

is, question my there or guess, I support number? anything the either was international of onetime-ish kind So in

No, was there not.

are in think scoring And balloons JADE the the of described have momentum. and which launch of Scoreflex coronary, products gain well our the international. been that was peripheral, of starting support I both in driven really product the really in momentum growth launch to and Just by balloon, continued adopted I our

guys have while, is lot a been I technology accounts, much a just maybe accounts. new wondering you're last specifically how just still of of And new and around left for you thinking the terms me. U.S. to of I'm I'm opportunity in The opening open for then guess

As our at past the U.S. new progress what over have is consistent most market, course account quarter-to-quarter. I few look is observed years of we the you the think likely that fairly

new opening us might then us. other as And accounts, the the train, that they moving We somewhat move practices, the That for to and right there's programs number generally in same along then part service, accounts. as are sites them, strategy a because hospitals, into coming and in about not opening into opening of accounts we are move many that normal be would really though, you of anticipate that strategy so with new as And results of we community up our move a they are have large into opportunity becomes occur of related they're country. I them accounts just creates that us across said, can in marketplace. would for up that customers. now the turnover develop as them their educate fellows that opportunities out and to always

kind I the relatively we're operating and more now. say, standard So environment stable that's the that in of would

for appreciate I So that. Jayson. thank that, you

no we call. have At further questions this the on time,

So Scott. back will I to it hand

this month. to thank at We conferences you Canaccord updating very for in today's later Thank Okay. look call. joining and the many you, Stifel you forward much, that of we'll be and everyone, participating

a Have day. great everyone. thanks, So