Cardiovascular Systems (CSII) provides medical device solutions for the treatment of vascular and coronary disease. This month, it delivered robust Q4 numbers and also made key changes to its risk factors.
Let us take a look at the financial performance of the company and understand what has changed in its key risk factors that investors should know.
Cardiovascular Systems’ Q4 revenue jumped 66.8% year-over-year to $71 million, surpassing the Street’s consensus by $2 million.
The Chairman, President, and CEO of Cardiovascular Systems, Scott Ward, said, “Strong execution with the addition of new customers and deeper penetration of high volume cath labs combined with a decline in COVID cases across the nation allowed CSI to drive higher atherectomy volumes throughout the fourth quarter. As a result, we achieved double-digit sequential revenue growth in both our U.S. Peripheral and coronary franchises.”
Additionally, the company witnessed robust international sales of $3.7 million on the back of strong momentum witnessed in Japan and Europe.
While Cardiovascular Systems’ SG&A expenses jumped 31% during this period, R&D expenses decreased 22%. The growth in top-line helped Cardiovascular Systems narrow its net loss per share to $0.14 from a net loss per share of $0.43 a year ago. This figure was lower than the estimated net loss per share by $0.03. (See Cardiovascular Systems stock chart on TipRanks)
For Fiscal Year 2022, Cardiovascular Systems estimates its revenue to be in the range of $295 million and $305 million. It sees net loss landing between 2% and 3% of revenue.
On August 5, Needham analyst Michael Matson reiterated a Buy rating on the stock with a price target of $50.
Matson said, “We believe that increased penetration in Coronary, continued growth in Peripheral, and new support product launches and international expansion should support revenue growth. We see potential for upside to consensus and expect this to drive CSII’s EV/Sales multiple higher.”
Consensus on the Street is a Strong Buy based on 4 unanimous Buys. The average Cardiovascular Systems price target of $48.25 implies 31.9% upside potential. Shares are down 15.7% so far this year.
Now, let’s look at what’s changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, Cardiovascular Systems’ main risk categories are Finance & Corporate and Legal & Regulatory, which account for 23% each of the total 35 risks identified. Since June, the company has changed four key risk factors.
Under the Legal & Regulatory risk category, Cardiovascular Systems states that its five-year Corporate Integrity Agreement with OIG expired in June and a final report needs to be submitted to the OIG. Until now, the company has devoted significant resources and management time to compliance. If the company fails to comply with or is found in breach of the agreement then Cardiovascular Systems could be liable to penalties or get excluded from federal healthcare programs.
Cardiovascular Systems is subject to laws and regulations, which prohibit kickbacks and false and fraudulent claims. If the company is found in violation then it could be subject to penalties and loss of business. Further, any challenges or investigations under these laws may result in negative publicity for the company, which may also be costly to respond to.
The next two risk changes fall under the Macro & Political category. Cardiovascular Systems acknowledges that the effects of natural disasters such as hurricanes and flooding, including other external events, could impact its revenue, inventories and supply chain. Such a scenario may negatively affect the company’s financials and operations.
Cardiovascular Systems noted that outbreaks of contagious diseases such as COVID-19 and other public health crises could impact its business and operations, which may impact the company’s financial health significantly.
The Macro & Political risk factor’s sector average stands at 5%, compared to Cardiovascular Systems’ 11%.
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