What: Shares of Cardiovascular Systems (CSII), a medical device company with a focus on minimally invasive surgery products used to treat vascular disease, fell more than 15% today after reporting second quarter earnings results.
So what: Revenue during the quarter grew 22% to $48.5 million, which was below the low end of the $49 to $50.5 million range that the company guided for during last quarters report. Management blamed the shortfall on having a lower than expected sales headcount during the quarter than they were planning. On the bottom line, the company reported a net loss of $0.27 per share, which was better than the $0.30 loss that analysts were expecting.
During the quarter, the company received FDA clearance for its new ViperWire Advance Peripheral Guide Wire with Flex Tip. This product should allow physicians improved access when treating arterial calcium associated with Peripheral Artery Disease, or PAD, and is expected to launch in August 2015
Looking ahead, the company is guiding for revenue growth of 23% to 27% next quarter, which would be a range of $48.5 to $50 million, and for net-loss to come in at $0.38 to $0.40 per share.
Now what: The company estimates that as many as 18 million Americans have PAD, which is caused by an accumulation of plaque in the peripheral arteries, and the prevalence of PAD is growing rapidly. The company believes this represents a market opportunity worth around $12 billion, and that it is well positioned to continue to grow sales in this market.
While the company is still losing money, it currently holds more than $80 million in cash on its balance sheet, which should be enough to allow the company to reach profitability if they can continue to grow the top line strongly. While showing a sales shortfall based on managements own guidance is never a good thing, the opportunity in front of this company certainly looks huge, so today's price movement may represent an attractive entry point for a long-term oriented investor.
