The third-quarter loss from operations improved 30 percent to $(6.5) million from $(9.3) million in the third quarter of fiscal 2008. The net loss improved 64 percent to $(3.8) million in the third quarter, from $(10.6) million in the third quarter of fiscal 2008.
The fiscal 2009 third-quarter net loss includes income of $3.2 million from a decline in the value of redeemable convertible preferred stock warrants, estimated just prior to their conversion to common stock warrants in connection with the reverse merger. In addition, the third quarter’s net income available to common shareholders includes income of $25.8 million from a decline in the value of redeemable convertible preferred stock, estimated just prior to its conversion to common stock. The third quarter of 2008 includes losses of $(0.7) million and $(14.2) million from the accretion of the redeemable convertible preferred stock warrants and stock, respectively.
The fiscal third-quarter gross margin increased to 74 percent from 67 percent in the same period last year, driven by higher disposable volumes, product cost reductions and manufacturing efficiencies. Sales, general and administrative expenses grew 41 percent – a rate less than half of the revenue growth rate – to $14.3 million. The increase was due to expansion of the direct sales organization to nearly 100 professionals from 36 in March 2008. The sales team is expected to grow to just over 100 in the fiscal fourth quarter. Cardiovascular Systems has continued to invest significantly in innovation and product development; however, research and development expenses declined 21 percent to $3.4 million due to the completion and timing of projects.
The balance sheet as of March 31, 2009 reflects the reverse merger. Cash increased to $37.8 million from $6.4 million at December 31, 2008 and $7.6 million at the end of fiscal 2008. All preferred stock warrants and preferred stock have been converted to common stock warrants and stock, and recorded in shareholders’ equity. Cardiovascular Systems now has 13.8 million common shares outstanding.
In the first nine months of fiscal 2009, revenue grew to $40.8 million, compared to $12.3 million in the same period last year, which only had two quarters of revenue due to the timing of FDA clearance to market the initial Diamondback 360º product. The gross margin in the first nine months of fiscal 2009 was 71%, up from 57% in the same period last year, due to higher product volumes, manufacturing efficiencies and product cost reductions. In the first nine months of fiscal 2009, the net loss was $(26.3) million, compared to $(27.8) million in the same period last fiscal year. The lower net loss reflects higher revenue, partially offset by significant investments in sales and marketing, infrastructure to support growth and product development. The net loss available to common shareholders, including declines or accretion of preferred stock, was $(3.5) million, or $(0.57) per common share, in the first nine months of fiscal 2009, compared to $(47.2) million, or $(11.04) per common share, in the comparable period last year.
