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Summary

  • Cardiovascular Systems’ fourth quarter revenues grew to $39.6 million, a 37% year-over-year increase.
  • Its fourth quarter net loss was $9.6 million, or $0.31 per common share.
  • In my original analysis I predicted that the company’s Diamondback 360 device could be a game changer.
  • I believe that the early adoption rate of the device confirms my view.

Cardiovascular Systems (NASDAQ:CSII) reported earnings for the fiscal 2014 fourth quarter and full-year. Net loss widened slightly from $6.8 million or $0.28 per share in the year ago period to $9.6 million or $0.31 per share on revenues of $39.6 million, which increased 37% year-over-year. For the fiscal 2015 first quarter, CSII updated its EPS guidance to ($0.35)-($0.33). In my original article I noted that the company's Diamondback 360 percutaneous orbital atherectomy system ("OAS") is poised to contend in a $1.5 billion market dominated by last generation technologies, such as rotational atherectomy, cutting balloon or PTCA.

In March, the company obtained FDA clearance for its Diamondback 360 60cm Peripheral OAS, which allows physicians to gain access through the foot or ankle to treat peripheral arterial disease ("PAD"). David L. Martin, Cardiovascular Systems' President and CEO, said, "We are pleased with the early adoption of our new Diamondback 360 60cm Peripheral OAS, designed for tibiopedal access. Additionally, the controlled launch of our coronary system continued to gain traction during the fourth quarter, growing revenue by over 90 percent from the third quarter of this year, with more than 800 units sold."

One of CSII's top priorities is achieving high growth in PAD by expanding market share with its low profile and short length orbital technology, according to Martin. In June, the company started enrolling patients for its Coronary Orbital Atherectomy System Trial (COAST) trial, which has been designed to assess the safety and efficacy of CSII's new micro crown OAS in treating severely calcified coronary lesions in patients suffering from coronary artery disease ("CAD"). The trial, if successful, may help CSII secure commercial approval in Japan, a large and underserved CAD market. I believe that Cardiovascular Systems' revenue would be around $500 million within 2017. Assuming 14% industry average net margin, the company's after-tax earnings per share would be around $2.33 within the next three years. For more insight, read my original article.

Source: Update: Cardiovascular Systems Earnings