stifel 2019 healthcare conference - seeking alpha

©2019 Cardiovascular Systems, Inc. All Rights Reserved.

Stifel2019 Healthcare ConferenceNovember 19, 2019

Safe HarborFORWARD LOOKING STATEMENTS

This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Report Act of 1995, which are

provided under the protection of the safe harbor for forward-looking statements provided by that Act. For example, statements in this

presentation regarding CSI’s strategy; growth; future financial measurements and investments; product development plans, milestones

and introductions; geographic expansion; clinical trials and evidence; professional education efforts; and market estimates and

opportunities, are forward-looking statements. These statements involve risks and uncertainties that could cause results differ materially

from those projected, including, but not limited to, those described in CSI’s filings with the Securities and Exchange Commission, including

its most recent annual report on Form 10-K and subsequent quarterly and annual reports. CSI encourages you to consider all of these

risks, uncertainties and other factors carefully in evaluating the forward-looking statements contained in this presentation. As a result of

these matters, changes in facts, assumptions not being realized or other circumstances, CSI’s actual results may differ materially from the

expected results discussed in the forward-looking statements contained in this presentation. The forward-looking statements contained in

this presentation are made only as of the date of this presentation, and CSI undertakes no obligation to update them to reflect subsequent

events or circumstances.

FINANCIAL INFORMATION

This presentation includes calculations or figures that have been prepared internally and have not been reviewed or audited by CSI’s

independent registered accounting firm. Use of different methods for preparing, calculating or presenting information may lead to

differences, which may be material.

2

Driving Sustainable GrowthBroaden Our Value Streams

Financial Goal: FY19 - FY23 CAGR of 15% - 18%

Revenue of $435M - $500M in FY23

Financial strength and the talent to execute

Grow and Protect

the Core Business

Innovation Drives

Incremental Growth

Global Expansion Accelerates

Growth of Core Business

Sustain Market Leadership

10+% Growth in Core Business

Launch 20+ New Products

$70M - $100M in FY23

OrbusNeich and Medikit

$25M - $50M in FY23

3

Fiscal 2019 Revenue Growth of 14.3%

New Product,

$3.9

$248 Million

Core OAS New Product International

New Product Revenue

$3.9 million

Drivers

Sapphire II 1.0 mm PTCA

Teleport Microcatheter

Zilient Peripheral Guidewire

International Revenue

$7.9 million

Drivers

Launched OAS in 10

countries

Over 2,000 OAS procedures

Core OAS Revenue

$236.2 million

10% increase

4

Key Events & Milestones

FY19A FY20E FY21E

Sold 80,650 OAS

International revenue = $7.9M

Launched OAS in SE Asia, Europe

and Middle East

Certified 120 OUS physicians

Launched Classic Crown and

ViperWire Flex Tip in Japan

New product revenue = $3.9 million

Launched Teleport Microcatheter

Launched ViperCath XC

Launched Peripheral ViperWire with

Flex Tip

Radial full market release

Exchangeable limited market release

81% consolidated gross margin

Enrolled first patient in REACH PVI

Enrollment of ECLIPSE passes 950

Pre-submission meetings with FDA

for hemodynamic support

Completed $350M shelf filing

WIRION acquisition

LIBERTY 360 3-Year Data

• Launch OAS in up to 10 new countries

• Certify >120 international physicians

• International revenue = $10M-$11M

• New product launches:

PAD Exchangeable full market release

CAD Nitinol ViperWire Flex Tip

• PAD Next Gen OAS with GlideAssist

• PAD JADE angioplasty balloons

• Sapphire 1.0mm over-the-wire

• Sapphire NC Plus 4.5-5.0mm

• REACH PVI enrollment completion

• ECLIPSE enrollment reaches 1500

• Hemodynamic support - First in Human

• International revenue = $15-$17.5M

• Launch OAS in Canada and other

countries

• Japan peripheral first enrollment

• ECLIPSE enrollment complete

• REACH PVI data release

• US IDE Small Vessel first enrollment

• Manufacturing transfer of WIRION

• WIRION launch in U.S.

• CAD ScoreFlex NC in U.S.

• PAD radial toolkit

5

Portfolio expansion will drive a

>4X increasein CSI’s addressable market

FY19 FY23

Diversification Accelerates Growth

• Millennium Research Group (2018 December) Medtech360 Market Analysis - Interventional Cardiology Devices – US –2019

• Millennium Research Group (2018 December) Medtech360 Market Analysis – Peripheral Vascular Devices – US – 2019• Millennium Research Group (2017 December) Medtech360 Market Analysis – Cardiac Assist Devices– US – 2018• CSI Internal Estimates

• * Coronary markets include device revenue attributed to PTCA balloon catheters, microcatheters / guidecatheters, PTCA guidewires, CTO / STO devices, and hemodynamics pumps. Peripheral markets include device revenue attributed to lower extremity (iliac, fempop, infrapop) endovascular procedures for PTA guidewires, catheters / sheaths, embolic protection devices, CTO / STO devices, and PTA balloon catheters

Broadens Value Streams

6

~$3.7B

$650M

CSI’s Addressable Markets (US)

Interventional Support Devices

Atherectomy

Hemodynamic Support

Current Market Dynamics Favor InnovationLarge Under-Served and Under-Treated Disease States

7

• Heart Disease and Stroke Statistics- 2019 Update: A report from the American Heart Association. Circulation. 2019;139:e56–e528• Millennium Research Group (2018 December) Medtech360 Market Analysis - Interventional Cardiology Devices – US – 2019• Millennium Research Group (2018 December) Medtech360 Market Analysis – Peripheral Vascular Devices – US – 2019• Bortnick, et. al. Am J Cardiol 2014;113:573-579; iData Research (2018 March) U.S, CSI Internal Estimates• Allie DE , et al. (n.d.). 24-carat gold, 14-carat gold, or platinum standards in the treatment of critical limb ischemia: bypass surgery or endovascular intervention? J Endovsc Ther. 2009

Coronary Artery DiseaseGrowing proportion of coronary

interventions represented by complex

or complex high-risk PCIs

16-18

million

People living with coronary

artery disease

18-20

million

People living with peripheral

artery disease in the U.S. with

2 million+ patients suffering

from critical limb ischemia

370,000Deaths annually from coronary

artery disease>740K Lower extremity PVIs

Peripheral Artery DiseaseSignificantly under-diagnosed and

under-treated patient populations

160K 525KComplex or complex

high-risk PCIsAmputations per year

Launched Q1 FY19

Radial is a Core Competitive AdvantageEnabling a Complete Peripheral Intervention from the Radial Artery

Extended Length Orbital Atherectomy

System with Low 5Fr Profile

Launched Q2 FY19 Expected Launch Early FY21

Exclusive route of access

for CSI complementary to

tibial/pedal

Expansion in portfolio of

radial support devices

Radial peripheral interventions

expand access to care and

can improve procedural

recovery time

Expected Launch Early FY21Expected Launch Early FY21

Extended length

Guidewires

Extended length

PTA Balloons

Extended length

Exchange Catheters

Extended length Radial

Access Sheaths

8

Grow and Protect

the Core Business

Supporting Complete Leg RevascularizationExchangeable Series with GlideAssist® – Our Most Advanced OAS on the Market

Patient and economic benefits with more efficient procedures aligned to market

dynamics

Future Portfolio: New 1.0 mm crown for small vessel / below-the-ankle lesions

and a larger crown intended for larger vessels like the common femoral and

iliac arteries

GlideAssist to facilitate tracking, repositioning and removal of OAD through

challenging anatomy

Exchangeable cartridges with different catheter lengths and crown options to

optimally treat patients with multi-level disease (seen ~50% of the time)

within the same procedure

Ease-of-Use Enhancements to Handle: Backloadable system facilitating easier

wire exchanges and improved tactile feel

9

Grow and Protect

the Core Business

Leadership in Clinical Evidence

600Physicians

5000+Patients

7000Lesions

Grow and Protect

the Core Business

10

ECLIPSE TrialGenerating Level One Evidence to Impact Guidelines

2000Patients with Severely

Calcified Lesions

2nd generation DES implantation

and optimization

2nd generation DES implantation

and optimization

1. Post-PCI in-stent MSA by OCT (N=~500 in imaging sub-study)

2. 1-year TVF (all subjects)1o Endpoints

2o Endpoints 1. Procedural Success: Successful stent delivery (all subjects)

2. Strategy Success: Procedural success without crossover

1.25 mm Classic Crown followed by

balloon pre-dilation

Orbital Atherectomy Strategy

Conventional and/or specialty balloons

per operator discretion

Conventional Angioplasty Strategy

Principal Investigators

Study Chairman

Randomize

1:1

Ajay Kirtane, MD; Philippe Généreux, MD;

Gregg W. Stone, MD

~500 subjects in OCT cohort

OAS >1 mm2 superior MSA vs. POBAMSA

All subjects

OAS >5% reduction in TVF vs. POBATVF

11

Primary Endpoints

Grow and Protect

the Core Business

Consistent Reimbursement

FacilityInpatient/

OutpatientProcedure 2020 Reimbursement % Change from 2019

Hospital Inpatient PAD $11,400 - $20,548 4.4% - 4.5%

Hospital Inpatient CAD $10,542 - $19,874 4.2% - 1.7%

Hospital Outpatient PAD/CAD $9,907 - $15,938 2.5% - 3.8%

Non-Hospital Outpatient/OBL PAD (ATK) $11,582 - $14,891 (6.9)% - (7.1)%

Non-Hospital Outpatient/OBL PAD (BTK) $11,626 - $14,476 (6.6)% - (5.0)%

$0

$5,000

$10,000

$15,000

$20,000

PAD OBL

PTA Ath/PTA

Stent Ath/Stent

$0

$5,000

$10,000

$15,000

$20,000

PAD Hospital Outpatient

PTA Ath/PTA

Stent Ath/Stent

$0

$5,000

$10,000

$15,000

$20,000

CAD Inpatient

PCI PCI/BMS PCI/DES

$0

$5,000

$10,000

$15,000

$20,000

CAD Outpatient

PTCA Ath/PTCA

Stent Ath/Stent

MS-DRG 246, 247, 248, 249, 250, 251, 252, 253, 254; CPT® Codes 37225, 37227,

37229, 37231, 92924, 92933; C-APCs 5193,5194; HCPCS Code C9602

Payment amounts based on National Medicare Averages and will vary by provider.

Grow and Protect

the Core Business

12

Expansion of the Complex Coronary ToolkitDrives Incremental Revenue Opportunity Per Case

Coronary Diamondback 360®

with GlideAssist®Sapphire® Expansion

ScoreFlex NC

Sapphire® Balloons

Teleport® Microcatheter

Launched FY19Launched FY19

• Sapphire SC II PRO 1.0-4.0mm


Launched FY19

Expected Launches FY20

• Sapphire SC II PRO 1.0mm OTW


Expected Launch FY21

Adding Essentials of

the Complex PCI Toolkit

Increasing the Clinical Utility

of the Sapphire Portfolio in

the Near-Term

Continuing to Innovate around

the Complex Patient Long-Term

ViperWire Advance® with Flex Tip

13

Launched Q1 FY20

Innovation Drives

Incremental Growth

WIRION® Embolic Protection SystemSupporting Our Commitment to Complex Patients

14• Millennium Research Group (2018 December) Medtech360 Market Analysis – Peripheral Vascular Devices – US – 2019• CSI Internal Estimates

• Easier to use and more versatile than competing EPDs with

clearance for use with any peripheral atherectomy device and any

0.014” guidewire

• Demonstrated safety and non-inferiority to pre-specificed

performance goals in capturing debris with low adverse event rates

in WISE LE study

• Platform enables future innovation for potential BTK and Radial

applications

Share-Taking Differentiated Technology

Commercialization expected in FY21 following completion of the manufacturing transfer from Gardia Medical

Broadens value streams in $50M market, 50,000 devices used in the U.S.

Complements CSI’s future directional atherectomy platform

Provides assurance to physicians not using atherectomy today due to

concern of distal emboli

Synergistic with CSI Strategy and Mission

Protecting Patients During PVIs

Embolic debris can be associated with all types of peripheral vascular

intervention procedures

EPDs are typically used when treating vessels located above the knee with

long lesions, high plaque burden, and poor run off

Can provide additional assurance when treating complex peripheral

interventions and lesions

Innovation Drives

Incremental Growth

Global Distribution Network

MediKit

OrbusNeich

Key

CSI Direct Sales

ST. PAUL

Corporate Headquarters

• ≈ 800 employees

• United States direct sales

force includes 200 quota

reps and 100+ clinical

specialists

HONG KONG


• ≈ 600 employees

• Supplies medical devices

in more than 60 countries

on six continents

• Exclusive distributor for

CSI outside U.S. and

Japan

TOKYO


• ≈ 1,000 employees

• Exclusive distributor for

CSI in Japan



15

Steady Cadence of New Geographies

16

OUS Launches

FY18 FY19 FY20E

Co

ron

ary

• Japan • Hong Kong*

• Kingdom of Saudi Arabia

• Malaysia*

• Singapore*

• United Arab Emirates

• EU

• Indonesia

• Kuwait

• Lebanon

• New Zealand

• Thailand

• Vietnam

Pe

rip

he

ral

• France

• Germany

• Hong Kong*

• Malaysia*

• Singapore*

• Spain

• Switzerland

• EU (Austria, Belgium, Czech

Republic, Denmark, Finland,

Iceland, Ireland, Italy,

Netherlands, Norway,

Romania, Sweden, UK)

• Indonesia

• Kingdom of Saudi Arabia

• Lebanon

• New Zealand

• Thailand

• United Arab Emirates

• Vietnam

1 9 Up to 10

FY19 - FY23 Revenue Growth

Targeting $25M - $50M in International Revenue in FY23

$1.8M

$7.9M

$10M-$11M

$15M - $17.5M

$25M - $50M

FY18 FY19 FY20E FY21E FY23E

Bold – OAS launched

* Coronary and Peripheral OAS launched

Italic – Anticipated OAS regulatory approval



Platform for Growth

~$250MFY19-FY23

R&D Investments

Maintain focus on current customer, vessel

preparation and procedure support

Organic growth and opportunistic portfolio

management

R&D investments increase to 14%-17%

of revenues in FY21

Gross margins in the range of 78%-80% in

FY21

Launch 20 new products by FY23

17

Cardiovascular Systems, Inc. Creating Shareholder Value

Leveraging a

Strong Core Business

A Compelling

Growth Strategy

Creating

Competitive Advantage

Financially Strong

with the Team and

Talent to Win

Expanding into

new geographic markets

Driving market leading

performance in orbital

atherectomy

Launching an innovative

portfolio of new products

Positive cash flow, strong

cash position and no

long-term debt

Sustaining double digit

growth

with strong gross margins

Positioned to invest

in organic growth

A Mission driven organization

with the leadership and

talent to succeed

Innovation and robust

medical evidence

Highest quality

products, services

and relationships

Medical education

and superior clinical

support

Serving large and

growing markets

Proprietary

core technology

Improving outcomes for

complex coronary and

peripheral artery disease

18

Appendix: Q1 FY20 Highlights

Highlights

Financial

Revenue Growth +15% vs. LY

Gross Margin 80.4%

SGA Expenses +13% to $46.8M

R&D Expenses +46% to $10.8M

Net Loss of $(5.8)M

Cash and marketable securities

$105M

No long-term debt

Operational - Peripheral

• Strong case support drove

strength in hospitals and office

based labs

• OAS innovation – pedal, tibial,

radial access - including

increased adoption of 5Fr radial

access device and launch of

exchangeable PAD device are

expanding treatment options for

physicians

• Three-year results of LIBERTY

360° study presented at AMP

Operational – Coronary

• Continued adoption of coronary

toolkit featuring OAS with

GlideAssist, 1.0mm Sapphire

angioplasty balloons and

Teleport Microcatheter

• 60% of coronary accounts

ordered procedure support

devices

• FDA approval of nitinol

ViperWire with Flex Tip

• Increased number of dedicated

coronary reps to 30

• Achieved 20% market share in

Japan

• ECLIPSE enrollment >1000

Other

• Sold ≈21,200 OAS units

• Certified 79 international

physicians

• Hosted product pipeline update

at TCT highlighting how

innovation expands our

addressable markets. Radial

and exchangeable peripheral

OAS broaden our competitive

advantage. Directional

atherectomy targets large ATK

atherectomy market. Shared

pVAD images and angiogram of

animal study. Reiterated FY23

revenue target of $435M-$500M

19

Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20

Appendix: Q1 FY20 Financial Results ($ in millions)


$15.0$16.0

$18.2

$20.0$19.0

$48.3$45.2$44.2

$41.2

$45.5

Worldwide Peripheral Revenue Growth Worldwide Coronary Revenue Growth

Gross Margin


80.3%80.8%80.9%81.2% 80.4%


Cash and Marketable Securities

$105.0$113.9 $119.2 $115.7 $122.7

10%

growth

in Q1

26%

growth

in Q1

20

Appendix: Consolidated Balance Sheet

Dollars in thousands, except per share and share amounts

21

Appendix: Consolidated Statements of Operations

Dollars in thousands, except per share and share amounts

22

Appendix: Consolidated Statements of Cash Flows

Dollars in thousands

23

Investor Contact:

Jack Nielsen

651-202-4919

[email protected]

CSI®, Diamondback®, Diamondback 360®,

GlideAssist®, ViperWire®, WIRION® and

ViperWire Advance® are trademarks of

Cardiovascular Systems, Inc.

© 2019 Cardiovascular Systems, Inc.

OrbusNeich®, Teleport® and Sapphire® are

trademarks of OrbusNeich Medical, Inc.

NASDAQ: CSII

Twitter: @csi360

www.csi360.com

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