Cardiovascular Systems, Inc.

Good morning. Welcome to today's Cardiovascular Systems Inc. Fiscal Year 2022 Second Quarter Earnings Conference Call. My name is Candice and I will be your operator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for question and answer at the end. If you would like to ask a question, please press start followed by one on your telephone keypad. I would now like to pass the conference over to our host, Jack Nielsen, Vice President of Investor Relations. Jack, please go ahead.

Thank you, Candace. Good morning, and welcome to our fiscal 22 second quarter conference call. With me today are Scott Ward, CSI Chairman, President, Chief Executive Officer, Rhonda Robb, Chief Operating Officer, and Jeff Points, Chief Financial Officer. Earlier this morning, we issued a press release announcing second quarter results. You may find a copy of this release on our investor relations section of our corporate website. Here you may also find an earnings supplement that includes additional details on our performance and outlook. During today's call, we will make forward-looking statements. These forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding CSI's future financial and operating results or other statements that are not historical facts. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those described in our most recent Form 10-K and subsequent quarterly reports on Form 10-Q. In particular, the COVID-19 pandemic has created risks and uncertainties for our business, results of operations, financial conditions, and prospects, which we will discuss on this call. CSI disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments, or otherwise. We will also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's press release contains a reconciliation to GAAP results. I will now turn the call over to Scott Ward.

Thank you, Jack. Good morning, everyone, and welcome to the call. Today, we reported Q2 worldwide revenue of $59.1 million, representing a 1.3% sequential increase but a decrease of 7.8% versus the prior year. This revenue performance reflects another quarter where our business continued to be pressured primarily by lower procedure volumes related to hospital capacity issues and staffing shortages caused by COVID-19. Our recovery from the Delta variant was suppressed by the arrival of Omicron in December. Consistent with past surges, the impact was more acute in the peripheral claudication segment of our business, which is deemed more deferable and is more susceptible to the long-term havoc created by COVID. We now know that staffing turnover and shortages caused by COVID have had a chronic dampening effect on the entire peripheral vessel preparation and atherectomy market. The latest market data from independent sources indicates that the peripheral Vessel preparation and atherectomy procedure volumes are down 10 to 12% versus the prior year. The good news is that we continue to believe this is temporary and that many of these procedures will be regained as the Omicron surge fades, the healthcare system recovers, and patients return to hospitals and clinics for long overdue interventions. It is difficult to predict the exact timing, but we expect a backlog of cases to gradually flow through our accounts at some point after this latest wave recedes. We are also encouraged that the fundamentals in our business, like new accounts, new customers trained, and new contracts, all improved sequentially in Q2, and we continue to gain share and achieve strong growth in our international markets. In addition, we achieved sequential growth in our U.S. coronary business in Q2, and we believe that we are recovering some market share. We expect this to continue as cath labs and physicians return to the consistent use of atherectomy in their standard daily clinical practice. We believe we have the preeminent sales force in the U.S. market. The work we do improves the quality of life, prevents amputations, and saves lives for thousands of patients every year. Our morale has remained strong, and our employees have diligently supported our customers and patients throughout this latest surge. So even though COVID has caused us to adjust our near-term outlook for this fiscal year, we are excited about our future and we expect to return to growth supported by improving market dynamics, our innovative product pipeline, and expansion in large and fast-growing markets. In a moment, Rhonda will provide additional information regarding our commercial progress. But first, Jeff will provide you with additional details regarding our second quarter financial results and our revised revenue guidance.