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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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41-1698056
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1225 Old Highway 8 Northwest
St. Paul, Minnesota
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55112-6416
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, One-tenth of One Cent ($0.001)
Par Value Per Share
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The NASDAQ Stock Market LLC
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
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Smaller reporting company
o
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Emerging growth company
o
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(Do not check if a smaller reporting company)
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Page No.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 9.
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Item 9A.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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•
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an electrically-powered control handle, which allows movement of the crown and predictable crown location;
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a flexible drive shaft with an eccentrically mounted diamond-coated crown, which tracks and orbits over the guide wire; and
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•
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a sheath, which covers the drive shaft and permits delivery of saline or medications to the treatment area.
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•
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Speed.
An increase in speed creates a larger orbital radius, thus accommodating larger diameter vessels. Our Peripheral OAS allows the user to choose between three rotational speeds and our Coronary OAS Classic Crown allows the user to choose between two rotational speeds.
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Crown Characteristics.
The crowns for the OAS are designed with various weights (as determined by crown geometry and material density) and are coated with diamond particles. The Peripheral OAS crowns are available in three configurations: classic, micro and solid. Physicians select crown sizes and configurations based on several case criteria, including reference vessel size, lesion length and degree of stenosis, stenosis morphology, and anatomy tortuosity. The crown for the Diamondback 360 Coronary OAS is available in two configurations: 1.25 millimeter classic crown and the recently-approved 1.25 millimeter micro crown which is designed to both pilot through tight, severely calcified coronary lesions and treat 2.5 to 4mm vessels with a single device.
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•
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Differential Sanding Reduces Risk of Adverse Events
. The OAS is designed to differentiate between hard, non-compliant plaque and soft, compliant arterial tissue. Arteries are composed of three tissue layers (from inside to out): the intima, media, and adventitia. The eccentrically mounted diamond-coated crown at the working end of the device engages and removes plaque from the artery wall with minimal likelihood of penetrating or damaging the fragile intima, or inner layer of the arterial wall because soft, compliant tissue flexes away from the crown.
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Eliminates Need for Distal Protection.
The small size of the particles produced during sanding avoids the need for ancillary distal protection devices, commonly used with directional cutting atherectomy devices. The small particulate size also significantly reduces the risk of macroembolization, or larger pieces of removed plaque capable of blocking blood flow downstream.
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Allows Continuous Blood Flow During Procedure.
The OAS allows for continuous blood flow while orbiting, as well as constant flushing of particulates during treatment. Other devices may restrict blood flow due to the size of the catheter required or the use of distal protection devices, which could result in complications such as excessive heat and tissue damage.
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Benefits of Smaller Sheaths.
The Diamondback 360 Peripheral OAS portfolio is uniquely compatible with 4 French (“Fr”) to 6Fr sheaths. Centrifugal force enables the OAS to treat large vessels through small sheaths; for example, it can treat up to 5mm vessel through a 4Fr sheath. Smaller sheaths may be associated with less femoral bleeding, shortened post-procedure ambulation time and reduced radiation exposure. In addition, the primary complication in peripheral interventions is a vascular access site complication. Exchanging to a larger sheath has been shown to be the strongest predictor of bleeding complication during peripheral interventions.
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Efficacy Demonstrated for Both Peripheral OAS and Coronary OAS.
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◦
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Peripheral OAS -
Our pivotal OASIS clinical trial was a prospective 20-center study that involved 124 patients with 201 lesions treated by the Diamondback 360 Peripheral OAS. Performance targets were established cooperatively with the FDA before the trial began. Despite 55% of the lesions consisting of calcified plaque, the Diamondback 360 Peripheral OAS successfully met the study endpoints.
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◦
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Coronary OAS
- Our pivotal ORBIT II coronary OAS trial was designed to evaluate the safety and efficacy of OAS in treating
de novo
severely calcified coronary lesions. The trial met both the primary safety and efficacy endpoints by significant margins. Preparation of severely calcified plaque with the Coronary OAS not only helped facilitate stent delivery, but also improved both peri-procedural and 30-day clinical outcomes compared with the outcomes of historic control subjects in this difficult-to-treat patient population.
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Treats Difficult, Fibrotic and Calcified Lesions.
The OAS enables physicians to remove plaque from long, fibrotic, calcified or bifurcated lesions, as well as lesions with softer plaque, in peripheral arteries both above and below the knee. In the coronary arteries, the OAS enables physicians to treat complex, severely calcified lesions, enabling stent placement in these difficult to treat lesions. To date, the Coronary OAS is the only FDA-approved device approved specifically for treatment of severely calcified coronary lesions.
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Orbital Motion Improves Lesion Compliance.
The orbiting action of the OAS removes the hard plaque in the artery by sanding, while the centrifugal motion of the eccentrically mounted crown creates pulsatile forces. Compliance change is achieved as the OAS differentiates between hard, diseased plaque and healthy, compliant arterial tissue, a concept that we refer to as “differential sanding.” The diamond-coated crown preferentially engages and sands away harder material, but is designed not to damage more compliant parts of the artery, which flex away from the crown. Physicians position the crown at the site of a lesion containing arterial plaque and orbit the crown against it to sand away the superficial, or surface, plaque and create a smooth lumen, or channel, in the vessel. In addition, the crown’s rotating eccentric mass and orbital motion deliver pulsatile mechanical energy into the vessel wall. These pulsatile forces may break up deeper plaque and contribute to compliance change of the diseased segment of the artery. Together, these mechanistic components sufficiently remove or modify hard plaque, allowing for low pressure balloon inflation. The orbital motion and speed of the eccentrically mounted crown increases, thus allowing for continuous reduction of plaque with differential sanding and pulsatile forces, as the opening of the lumen increases during the operation of the devices.
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Differential Sanding Creates Smooth Lumens.
The differential sanding of the OAS creates a smooth lumen surface, or channel, inside the vessel. We believe that the smooth lumens created by the device increase the velocity of blood flow and decrease the resistance to blood flow, which may decrease the potential for restenosis, or re-narrowing of the arteries.
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Set Up Time.
Given the relative simplicity of the OAS, physicians and lab staff can usually set up and begin using the device in under two minutes.
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Utilizes Familiar Techniques.
Physicians using the OAS employ techniques similar to those used in angioplasty, which are familiar to interventional cardiologists, vascular surgeons and interventional radiologists who are trained in endovascular techniques. The devices’ simple user interfaces require minimal additional training.
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Single Crown Treats Multiple Lesions in Various Sized Vessels.
Centrifugal force unique to OAS allows for a single access site to treat multiple lesions, in most cases. In the coronary arteries, Coronary OAS is the only atherectomy device able to treat 2.5 to 4mm vessels with one device through a 6Fr radial approach. In the peripheral vasculature,
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•
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No Need for Collection Reservoir.
Because the particles of plaque sanded away are of such small sizes, the OAS does not require a collection reservoir that needs to be repeatedly emptied or cleaned during the procedure, which would potentially add time and cost to the procedure.
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Below-the-Knee and Behind-the-Knee Peripheral Artery Disease.
Arteries below and behind the knee are small in diameter and may be diffusely stenosed, calcified or both. Reaching and treating these small vessels requires a low profile, which most competitive devices do not offer. Behind-the-knee, or popliteal, lesions also present challenges if a stent is used because stents frequently fracture in this area due to the forces exerted on the vessels when the knee bends or flexes. The Diamondback 360 Peripheral OAS is effective in treating those vessels. The Peripheral OAS offers a shorter shaft length (60cm), a smaller profile and a more flexible shaft than the predecessors for improved ease of use, and includes a 4 Fr catheter that enables physicians to access lesions below-the-knee using retrograde access (access through the ankle or foot).
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Above-the-Knee Peripheral Artery Disease.
Arteries above the knee are typically longer, straighter and wider than below-the-knee vessels. Plaque in these arteries may also be diffuse, fibrotic and calcific. Physicians often use higher speeds or larger crown sizes of our products to treat lesions above the knee.
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Coronary Artery Disease.
The individuals more at risk for being diagnosed with CAD are those that are suffering from high blood pressure, abnormal cholesterol levels, diabetes, renal insufficiency, or have a family history of heart disease. The pathogenesis of CAD is marked by the accumulation of a fatty material called plaque on the walls of arteries that supply blood to the heart. The plaque buildup causes the arteries to harden and narrow (atherosclerosis), reducing blood flow. The Diamondback 360 Coronary OAS is the only atherectomy device specifically indicated for severe coronary calcium.
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Short Procedure Time.
The OAS has a short treatment time, typically less than two minutes.
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Single Crown Can Treat Various Lumen Sizes Helping Limit Hospital Costs.
The OAS orbital mechanism of action allows one device to treat various diameter lumens inside the artery. Adjusting the rotational speed of the crown changes the orbit to create the desired lumen diameter, thereby potentially avoiding the need to use multiple catheters of different sizes to treat multiple lesions.
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Trans-Radial Access Provides Multiple Benefits.
Treating complex, calcified lesions in the peripheral or coronary arteries remains difficult, particularly where patients may present challenging access sites. The OAS allows for trans-radial access with benefits to both physicians and patients. For physicians, this smaller access site provides lower vascular and bleeding complication rates, faster patient recovery time, and the ability to treat bilateral disease in one setting, address obese patients and work around previous, compromised access sites. For patients, this contributes to comfort during- and post-operation, earlier ambulation, reduced risk of infection, and faster healing.
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Retrograde Access Treatment Option Benefits.
Many of the patients treated with the Peripheral OAS have advanced PAD and suffer from CLI. These patients often have complex, calcified lesions in their lower leg, which are challenging to access and treat using the traditional femoral artery access site. If left untreated, these cases may result in lower limb amputation. CSI’s family of 1.25mm Peripheral OASs with 4Fr compatibility allows for more options to treat those lesions by providing a low-profile system that is fully compatible with alternative access sites in the foot or ankle. Smaller sheaths have been shown to reduce procedure times and decrease complications.
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Drive Adoption through Our Direct U.S. Sales Organization, Medical Education and Key Opinion Leaders.
We expect to continue to drive adoption of the OAS through our direct U.S. sales force in both hospital and office-based lab settings, which targets interventional cardiologists, vascular surgeons, and interventional radiologists. As a key element of our strategy, we focus on educating physicians about the disease states and our clinical data, and training physicians regarding the proper use and application of OAS technology through physician faculty, our direct sales force and through seminars where physician industry leaders discuss case studies and treatment techniques using the devices.
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Collect Additional Clinical Evidence on Safety, Effectiveness and Economic Benefits of the OAS.
Physicians and payers are increasingly requesting clinical and economic evidence to allow them to make decisions regarding optimal treatment of patients. We are focused on collecting clinical and economic evidence to demonstrate the advantages of the OAS in treating complex disease states such as peripheral and coronary artery disease. We believe that the clinical advantages and cost effectiveness of our OAS technology will help drive physician utilization of the OAS and sustain ongoing reimbursement coverage for our devices.
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Enhance OAS and Expand Product Portfolio within the Market for Treatment of Peripheral and Coronary Arteries.
In addition to enhancing the OAS, we offer multiple accessory devices for use with the OAS. We are continuing product development to further expand our portfolio of PAD and CAD treatment solutions.
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International Expansion.
In March 2017, we received regulatory approval for our coronary OAS Micro Crown device in Japan. We are evaluating options for further international expansion to maximize the coronary and peripheral market opportunities.
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Strategic Acquisitions and Partnerships
. In addition to adding to our product portfolio through internal development efforts, we intend to explore the acquisition of other product lines, technologies or companies that may leverage our sales force or complement our strategic objectives. We also intend to explore distribution agreements, licensing transactions, manufacturing agreements and other strategic partnerships.
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LIBERTY 360°
. This prospective, observational, multi-center clinical study is evaluating the procedural and long-term clinical, quality of life and economic outcomes of endovascular device interventions, including orbital atherectomy, for the treatment of PAD. We expect the results from this study to increase our understanding of the clinical and economic outcomes of endovascular treatment for PAD patients, including those with the most advanced form of the disease, Rutherford Class 6. Enrollment of 1,204 subjects at 51 sites in the U.S. was completed in February 2016.
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OPTIMIZE BTK.
This post-market, multi-center, randomized clinical study conducted in Europe is designed to evaluate the acute and long-term clinical outcomes of orbital atherectomy with adjunctive DCB angioplasty versus DCB angioplasty alone in PAD patients with calcified, below-the-knee lesions. Fifty evaluable subjects will be enrolled in OPTIMIZE BTK and will be followed for up to two years.
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COAST
. This prospective, single-arm, multi-center, global Investigational Device Exemption (“IDE”) study was conducted to evaluate the safety and efficacy of the Coronary OAS Micro Crown in treating
de novo
, severely calcified lesions prior to stent implantation. Enrollment of 100 patients, including 74 patients at 12 sites in the U.S. and 26 patients at five sites in Japan, was completed in July 2015. The study results through one year were presented in February 2017. The overall one-year MACE rate, defined as the composite of myocardial infarction (“MI”), cardiac death, and target vessel revascularization, was 22.2%. The COAST MI rate did not increase from 30 days to one year, and low rates of one-year cardiac death (1.0%) and target lesion revascularization (6.3%) were reported.
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MACE
. This prospective, multi-center, non-randomized study assessed the outcomes of current standard of care treatment in none/mild, moderate, and severely calcified coronary lesions. Treatment of the target lesion excluded use of OAS. Enrollment of 350 subjects was completed in September 2015. The one-year results of the MACE study were presented in February 2017. The MACE data through one year indicate that severe calcium is associated with higher short and long-term major adverse cardiac event rates compared to both none/mild and moderate calcification.
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ECLIPSE
. This post-market, randomized one-to-one, multi-center trial is designed to evaluate vessel preparation with OAS compared to conventional angioplasty technique prior to drug-eluting stent implantation for the treatment of severely calcified lesions. Approximately 2,000 subjects will be enrolled at approximately 150 sites in the U.S. and subjects will be followed for up to two years. The co-primary endpoints of acute minimum stent area (assessed by optical coherence tomography in a subset of 400 subjects) and one-year target vessel failure are powered to demonstrate superiority of OAS vessel preparation vs. conventional angioplasty.
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clinical results showing safety and efficacy of our products;
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educating physicians on the prevalence and complications of calcium in PAD and CAD; and
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developing relationships with key opinion leaders.
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safety and efficacy, even in calcified plaque (or severely calcified plaque in the coronaries);
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low profile and alternative access site capabilities;
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predictable clinical performance;
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availability of clinical data;
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ease of use;
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economic benefit;
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key opinion leader support and customer base; and
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customer service and support.
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the systems may not be safe or effective to the FDA’s satisfaction;
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the data from preclinical studies and clinical trials may be insufficient to support approval;
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the manufacturing process or facilities used may not meet applicable requirements; and
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changes in FDA approval policies or adoption of new regulations may require additional data.
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establishment registration and device listing upon the commencement of manufacturing;
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the QSR, which requires manufacturers, including third-party manufacturers, to follow design, testing, control, documentation and other quality assurance procedures during medical device design and manufacturing processes;
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labeling regulations, which prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling and promotional activities;
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medical device reporting regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if malfunctions were to recur;
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corrections and removal reporting regulations, which require that manufacturers report to the FDA field corrections; and
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product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA caused by the device that may present a risk to health.
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warning letters or untitled letters;
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fines, injunctions and civil penalties;
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product recall or seizure;
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unanticipated expenditures;
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delays in clearing or approving or refusal to clear or approve products;
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withdrawal or suspension of FDA approval;
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orders for physician notification or device repair, replacement or refund;
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operating restrictions, partial suspension or total shutdown of production or clinical trials; or
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criminal prosecution.
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Name
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Age
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Position
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Scott R. Ward
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57
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Chairman, President and Chief Executive Officer
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Laurence L. Betterley
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63
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Chief Financial Officer
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Kevin J. Kenny
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52
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Chief Operating Officer
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Laura Gillund
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56
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Chief Talent Officer
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Alexander Rosenstein
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45
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General Counsel and Corporate Secretary
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Sandra Sedo
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53
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Chief Compliance Officer
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•
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the actual and perceived effectiveness and reliability of our products;
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the prevalence and severity of any adverse patient events involving our products;
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the results of any clinical trials relating to use of our products;
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the availability, relative cost and perceived advantages and disadvantages of alternative technologies or treatment methods for conditions treated by our products;
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the degree to which treatments using our products are approved for reimbursement by public and private insurers;
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the degree to which physicians adopt the Peripheral OAS and Coronary OAS;
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the extent to which we are successful in educating physicians about PAD and CAD in general and the existence and benefits of the Peripheral OAS and the Coronary OAS in particular;
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the strength of our marketing and distribution infrastructure;
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the level of education and awareness among physicians and hospitals concerning our products; and
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our reputation among physicians and hospitals.
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develop and patent processes or products earlier than we will;
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obtain regulatory clearances or approvals for competing medical device products more rapidly than we will;
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market their products more effectively than we will;
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sell their products at lower prices than we do; or
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develop more effective or less expensive products or technologies that render our technology or products obsolete or non-competitive.
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announcements of technological or medical innovations for the treatment of vascular disease;
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quarterly variations in our or our competitors’ results of operations;
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failure to meet estimates or recommendations by securities analysts who cover our stock;
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failure to meet our own financial estimates;
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accusations that we have violated a law or regulation;
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recalls of our products;
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significant litigation;
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sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
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changes in accounting principles;
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actual or anticipated changes in healthcare policy and reimbursement levels;
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developments relating to our competitors and markets; and
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general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
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warning or other letters from the FDA;
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fines, injunctions and civil penalties;
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product recall or seizure;
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unanticipated expenditures;
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delays in clearing or approving or refusal to clear or approve products;
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withdrawal or suspension of approval or clearance by the FDA or other regulatory bodies;
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orders for physician notification or device repair, replacement or refund;
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operating restrictions, partial suspension or total shutdown of production or clinical trials; and
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criminal prosecution.
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Common Stock
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||||||
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High
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Low
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||||
Fiscal Year Ended June 30, 2017
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|
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||||
First quarter
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$
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25.22
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|
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$
|
18.00
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Second quarter
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27.38
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|
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21.29
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Third quarter
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29.70
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|
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23.28
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|
||
Fourth quarter
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33.11
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|
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27.73
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|
||
Fiscal Year Ended June 30, 2016
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|
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||||
First quarter
|
$
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32.91
|
|
|
$
|
14.91
|
|
Second quarter
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17.53
|
|
|
11.80
|
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||
Third quarter
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15.14
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|
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7.50
|
|
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Fourth quarter
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18.90
|
|
|
11.45
|
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•
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Fair value - We used the most recent appraisal of the Facility, performed during the buyers’ due diligence, as its fair value at the inception of the lease agreement. As the present value of minimum lease payments was more than 90% of this fair value, the lease was determined to be a capital lease. We reviewed all possible values and believe that the appraised value is the most appropriate for use in the lease analysis.
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•
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Interest rate - We used our incremental borrowing rate based on a prior proposal for a term loan. Management reviewed various factors and determined that the interest rate used in the calculation is reasonable.
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Year Ended June 30,
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||||||||||||
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2017
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2016
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Change
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Percent
Change
|
|||||||
Net revenues
|
$
|
204,906
|
|
|
$
|
178,184
|
|
|
$
|
26,722
|
|
15.0
|
%
|
Cost of goods sold
|
39,441
|
|
|
35,421
|
|
|
4,020
|
|
11.3
|
|
|||
Gross profit
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165,465
|
|
|
142,763
|
|
|
22,702
|
|
15.9
|
|
|||
Gross margin
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80.8
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%
|
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80.1
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%
|
|
0.7
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%
|
0.9
|
|
|||
Expenses:
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
144,096
|
|
|
162,542
|
|
|
(18,446
|
)
|
(11.3
|
)
|
|||
Research and development
|
22,911
|
|
|
25,934
|
|
|
(3,023
|
)
|
(11.7
|
)
|
|||
Restructuring
|
—
|
|
|
2,364
|
|
|
(2,364
|
)
|
100.0
|
|
|||
Legal settlement
|
—
|
|
|
8,000
|
|
|
(8,000
|
)
|
100.0
|
|
|||
Total expenses
|
167,007
|
|
|
198,840
|
|
|
(31,833
|
)
|
(16.0
|
)
|
|||
Loss from operations
|
(1,542
|
)
|
|
(56,077
|
)
|
|
54,535
|
|
(97.3
|
)
|
|||
Other (income) and expense, net
|
164
|
|
|
(145
|
)
|
|
309
|
|
(213.1
|
)
|
|||
Loss before income taxes
|
$
|
(1,706
|
)
|
|
$
|
(55,932
|
)
|
|
$
|
54,226
|
|
(96.9
|
)
|
Provision for income taxes
|
$
|
86
|
|
|
$
|
92
|
|
|
$
|
(6
|
)
|
(6.5
|
)
|
Net loss
|
$
|
(1,792
|
)
|
|
$
|
(56,024
|
)
|
|
$
|
54,232
|
|
(96.8
|
)
|
|
Year Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
Change
|
Percent
Change
|
|||||||
Net revenues
|
$
|
178,184
|
|
|
$
|
181,544
|
|
|
$
|
(3,360
|
)
|
(1.9
|
)%
|
Cost of goods sold
|
35,421
|
|
|
39,520
|
|
|
(4,099
|
)
|
(10.4
|
)
|
|||
Gross profit
|
142,763
|
|
|
142,024
|
|
|
739
|
|
0.5
|
|
|||
Gross margin
|
80.1
|
%
|
|
78.2
|
%
|
|
1.9
|
%
|
2.4
|
|
|||
Expenses:
|
|
|
|
|
|
|
|||||||
Selling, general and administrative
|
162,542
|
|
|
143,684
|
|
|
18,858
|
|
13.1
|
|
|||
Research and development
|
25,934
|
|
|
30,977
|
|
|
(5,043
|
)
|
(16.3
|
)
|
|||
Restructuring
|
2,364
|
|
|
—
|
|
|
2,364
|
|
100.0
|
|
|||
Legal Settlement
|
8,000
|
|
|
—
|
|
|
8,000
|
|
100.0
|
|
|||
Total expenses
|
198,840
|
|
|
174,661
|
|
|
24,179
|
|
13.8
|
|
|||
Loss from operations
|
(56,077
|
)
|
|
(32,637
|
)
|
|
(23,440
|
)
|
71.8
|
|
|||
Other (income) and expense, net
|
(145
|
)
|
|
71
|
|
|
(216
|
)
|
(304.2
|
)
|
|||
Loss before income taxes
|
(55,932
|
)
|
|
(32,708
|
)
|
|
(23,224
|
)
|
71.0
|
|
|||
Provision for income taxes
|
92
|
|
|
114
|
|
|
(22
|
)
|
(19.3
|
)
|
|||
Net loss
|
$
|
(56,024
|
)
|
|
$
|
(32,822
|
)
|
|
$
|
(23,202
|
)
|
70.7
|
|
|
Year Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Net loss
|
$
|
(1,792
|
)
|
|
$
|
(56,024
|
)
|
Less: Other (income) and expense, net
|
164
|
|
|
(145
|
)
|
||
Less: Provision for income taxes
|
86
|
|
|
92
|
|
||
Loss from operations
|
(1,542
|
)
|
|
(56,077
|
)
|
||
Add: Stock-based compensation
|
10,354
|
|
|
12,977
|
|
||
Add: Depreciation and amortization
|
4,135
|
|
|
3,917
|
|
||
Adjusted EBITDA
|
$
|
12,947
|
|
|
$
|
(39,183
|
)
|
•
|
Stock-based compensation
. Our management believes that excluding this item from our non-GAAP results is useful to investors to understand the application of stock-based compensation guidance and its impact on our operational performance and ability to make additional investments in the Company, and it allows for greater transparency to certain line items in our financial statements.
|
•
|
Depreciation and amortization expense
. Our management believes that excluding these items from our non-GAAP results is useful to investors to understand our operational performance and ability to make additional investments in the company.
|
•
|
Items such as stock-based compensation do not directly affect our cash flow position; however, such items reflect economic costs to us and are not reflected in our Adjusted EBITDA, and therefore these non-GAAP measures do not reflect the full economic effect of these items.
|
•
|
Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and therefore other companies may calculate similarly titled non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
|
•
|
Our management exercises judgment in determining which types of charges or other items should be excluded from the non-GAAP financial measures we use.
|
•
|
the funding of clinical trials and studies;
|
•
|
sales and marketing programs;
|
•
|
expansion into international markets; and
|
•
|
development of new products.
|
•
|
Cash (used in) provided by accounts receivable of
$(5.8) million
,
$7.3 million
, and
$(10.6) million
during the years ended
June 30, 2017
,
2016
, and
2015
, respectively, was primarily due to the amount and timing of revenue during the periods.
|
•
|
Cash provided by (used in) inventories was
$543,000
,
$(3.5) million
, and
$(1.1) million
during the years ended
June 30, 2017
,
2016
, and
2015
, respectively. Cash provided by inventory during fiscal 2017 was primarily due to lower inventory levels from better inventory management. Cash used by inventory during fiscal 2016 and 2015 was due to higher levels of inventory for future sales growth and new product launches, such as the Diamondback 360 Low Profile Peripheral OAS commercial launch in fiscal 2016 and Coronary OAS commercial launch throughout fiscal 2016 and fiscal 2015, as well as timing of inventory purchases and sales.
|
•
|
Cash (used in) provided by prepaid expenses and other current assets was
$(1.8) million
,
$728,000
, and
$(1.2) million
during the years ended
June 30, 2017
,
2016
, and
2015
, respectively, primarily due to payment timing of vendor deposits and other expenditures.
|
•
|
Cash provided by (used in) accounts payable of
$1.8 million
,
$(970,000)
, and
$581,000
during the years ended
June 30, 2017
,
2016
, and
2015
, respectively, was primarily due to the amount and timing of purchases and vendor payments.
|
•
|
Cash provided by accrued expenses and other liabilities was
$725,000
,
$10.9 million
, and
$4.4 million
during the years ended
June 30, 2017
,
2016
, and
2015
, respectively. Cash provided in fiscal 2017 was primarily due to the amount and timing of compensation payments. Cash provided in fiscal 2016 was primarily due to the restructuring accrual, benefits related to our former CEO’s departure, and the Department of Justice legal settlement expense. Cash provided in fiscal 2015 was primarily due to higher accruals for the executive deferred compensation plan, higher payroll and vacation liabilities related to increased headcount, clinical study accruals for increased activity, and the general timing and payment of accruals.
|
•
|
Proceeds of $20.9 million from the sale of the Facility in March 2017.
|
•
|
Employee stock purchase plan purchases of
$3.3 million
,
$3.1 million
, and
$2.9 million
during the years ended
June 30, 2017
,
2016
, and
2015
, respectively.
|
•
|
Proceeds from the exercise of stock options of
$5.3 million
,
$1.0 million
, and
$2.2 million
during the years ended
June 30, 2017
,
2016
, and
2015
, respectively.
|
|
Payments Due by Period (in thousands)
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
Less Than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
More Than
5 Years
|
||||||||||
Operating leases
(1)
|
$
|
1,377
|
|
|
$
|
551
|
|
|
$
|
826
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Financing obligation
(2)
|
30,046
|
|
|
1,650
|
|
|
3,449
|
|
|
3,660
|
|
|
21,287
|
|
|||||
Purchase commitments
(3)
|
19,054
|
|
|
19,054
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Legal settlement
(4)
|
4,128
|
|
|
1,814
|
|
|
2,314
|
|
|
—
|
|
|
—
|
|
|||||
Severance payments
(5)
|
1,236
|
|
|
1,138
|
|
|
98
|
|
|
—
|
|
|
—
|
|
|||||
Other
(6)
|
199
|
|
|
133
|
|
|
66
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
56,040
|
|
|
$
|
24,340
|
|
|
$
|
6,753
|
|
|
$
|
3,660
|
|
|
$
|
21,287
|
|
(1)
|
The amounts represent future minimum payments under a non-cancellable operating leases for our offices and production facility along with equipment.
|
(2)
|
The amounts represent future minimum payments due under the capital lease related to the sale leaseback of our Facility.
|
(3)
|
The amount represents open purchase orders as of June 30, 2017.
|
(4)
|
Consists of payments and related interest associated with the DOJ Settlement discussed above.
|
(5)
|
Includes severance related to our former CEO, restructuring activities, and other severance agreements.
|
(6)
|
Other includes service agreements.
|
|
Page
|
F-1
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
June 30,
2017 |
|
June 30,
2016 |
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
107,912
|
|
|
$
|
60,638
|
|
Accounts receivable, net
|
28,472
|
|
|
23,128
|
|
||
Inventories
|
16,897
|
|
|
17,440
|
|
||
Marketable securities
|
704
|
|
|
684
|
|
||
Prepaid expenses and other current assets
|
5,074
|
|
|
2,992
|
|
||
Total current assets
|
159,059
|
|
|
104,882
|
|
||
Property and equipment, net
|
29,696
|
|
|
32,471
|
|
||
Patents, net
|
5,056
|
|
|
5,013
|
|
||
Other assets
|
129
|
|
|
40
|
|
||
Total assets
|
$
|
193,940
|
|
|
$
|
142,406
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
10,736
|
|
|
8,506
|
|
||
Accrued expenses
|
30,236
|
|
|
26,993
|
|
||
Total current liabilities
|
40,972
|
|
|
35,499
|
|
||
Long-term liabilities
|
|
|
|
||||
Financing obligation
|
21,100
|
|
|
—
|
|
||
Deferred revenue
|
10,000
|
|
|
—
|
|
||
Other liabilities
|
3,479
|
|
|
6,010
|
|
||
Total liabilities
|
75,551
|
|
|
41,509
|
|
||
Commitments and contingencies
|
|
|
|
||||
Common stock, $0.001 par value at June 30, 2017 and 2016; authorized 100,000,000 common shares at June 30, 2017 and 2016; issued and outstanding 32,849,563 at June 30, 2017 and 32,792,497 at June 30, 2016
|
33
|
|
|
33
|
|
||
Additional paid in capital
|
447,559
|
|
|
428,235
|
|
||
Accumulated other comprehensive income
|
100
|
|
|
40
|
|
||
Accumulated deficit
|
(329,303
|
)
|
|
(327,411
|
)
|
||
Total stockholders’ equity
|
118,389
|
|
|
100,897
|
|
||
Total liabilities and stockholders’ equity
|
$
|
193,940
|
|
|
$
|
142,406
|
|
|
Year Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net revenues
|
$
|
204,906
|
|
|
$
|
178,184
|
|
|
$
|
181,544
|
|
Cost of goods sold
|
39,441
|
|
|
35,421
|
|
|
39,520
|
|
|||
Gross profit
|
165,465
|
|
|
142,763
|
|
|
142,024
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
|
144,096
|
|
|
162,542
|
|
|
143,684
|
|
|||
Research and development
|
22,911
|
|
|
25,934
|
|
|
30,977
|
|
|||
Restructuring
|
—
|
|
|
2,364
|
|
|
—
|
|
|||
Legal settlement
|
—
|
|
|
8,000
|
|
|
—
|
|
|||
Total expenses
|
167,007
|
|
|
198,840
|
|
|
174,661
|
|
|||
Loss from operations
|
(1,542
|
)
|
|
(56,077
|
)
|
|
(32,637
|
)
|
|||
Other (income) and expense, net
|
164
|
|
|
(145
|
)
|
|
71
|
|
|||
Loss before income taxes
|
$
|
(1,706
|
)
|
|
$
|
(55,932
|
)
|
|
$
|
(32,708
|
)
|
Provision for income taxes
|
86
|
|
|
92
|
|
|
114
|
|
|||
Net loss
|
$
|
(1,792
|
)
|
|
$
|
(56,024
|
)
|
|
$
|
(32,822
|
)
|
|
|
|
|
|
|
||||||
Basic and diluted earnings per share
|
$
|
(0.06
|
)
|
|
$
|
(1.72
|
)
|
|
$
|
(1.04
|
)
|
|
|
|
|
|
|
||||||
Basic and diluted weighted average shares outstanding
|
32,373,709
|
|
|
32,537,621
|
|
|
31,547,711
|
|
|
Year Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net loss
|
$
|
(1,792
|
)
|
|
$
|
(56,024
|
)
|
|
$
|
(32,822
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Unrealized gain on available for sale securities
|
66
|
|
|
20
|
|
|
90
|
|
|||
Adjustment for net gain realized and included in interest and other, net
|
(6
|
)
|
|
(70
|
)
|
|
—
|
|
|||
Total change in unrealized gain (loss) on available for sale securities
|
60
|
|
|
(50
|
)
|
|
90
|
|
|||
Comprehensive loss
|
$
|
(1,732
|
)
|
|
$
|
(56,074
|
)
|
|
$
|
(32,732
|
)
|
|
Common Stock
|
|
Additional
Paid In
Capital
|
|
Accumulated Other Comprehensive Income
|
|
Accumulated
Deficit
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||||
Balances at June 30, 2014
|
31,084,742
|
|
|
$
|
31
|
|
|
$
|
390,589
|
|
|
$
|
—
|
|
|
$
|
(238,565
|
)
|
|
$
|
152,055
|
|
Stock-based compensation related to restricted stock awards, net
|
469,575
|
|
|
1
|
|
|
14,088
|
|
|
—
|
|
|
—
|
|
|
14,089
|
|
|||||
Exercise of stock options at $5.01-$12.37 per share
|
222,937
|
|
|
—
|
|
|
2,152
|
|
|
—
|
|
|
—
|
|
|
2,152
|
|
|||||
Employee stock purchase plan activity
|
120,870
|
|
|
—
|
|
|
3,871
|
|
|
—
|
|
|
—
|
|
|
3,871
|
|
|||||
Unrealized gain on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
90
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,822
|
)
|
|
(32,822
|
)
|
|||||
Balances at June 30, 2015
|
31,898,124
|
|
|
$
|
32
|
|
|
$
|
410,700
|
|
|
$
|
90
|
|
|
$
|
(271,387
|
)
|
|
$
|
139,435
|
|
Stock-based compensation related to restricted stock awards, net
|
557,756
|
|
|
$
|
1
|
|
|
$
|
11,985
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,986
|
|
Exercise of stock options at $7.90-$12.37 per share
|
87,817
|
|
|
—
|
|
|
1,006
|
|
|
—
|
|
|
—
|
|
|
1,006
|
|
|||||
Employee stock purchase plan activity
|
248,800
|
|
|
—
|
|
|
4,544
|
|
|
—
|
|
|
—
|
|
|
4,544
|
|
|||||
Unrealized gain on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
20
|
|
|||||
Net gain reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
(70
|
)
|
|
—
|
|
|
(70
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(56,024
|
)
|
|
(56,024
|
)
|
|||||
Balances at June 30, 2016
|
32,792,497
|
|
|
$
|
33
|
|
|
$
|
428,235
|
|
|
$
|
40
|
|
|
$
|
(327,411
|
)
|
|
$
|
100,897
|
|
Stock-based compensation related to restricted stock awards, net
|
(635,018
|
)
|
|
$
|
—
|
|
|
$
|
9,412
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,412
|
|
Exercise of stock options at $7.90-$12.15 per share
|
515,164
|
|
|
—
|
|
|
5,362
|
|
|
—
|
|
|
(100
|
)
|
|
5,262
|
|
|||||
Employee stock purchase plan activity
|
176,920
|
|
|
—
|
|
|
4,550
|
|
|
—
|
|
|
—
|
|
|
4,550
|
|
|||||
Unrealized gain on marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
—
|
|
|
66
|
|
|||||
Net gain reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,792
|
)
|
|
(1,792
|
)
|
|||||
Balances at June 30, 2017
|
32,849,563
|
|
|
$
|
33
|
|
|
$
|
447,559
|
|
|
$
|
100
|
|
|
$
|
(329,303
|
)
|
|
$
|
118,389
|
|
|
Year Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities
|
|
||||||||||
Net loss
|
$
|
(1,792
|
)
|
|
$
|
(56,024
|
)
|
|
$
|
(32,822
|
)
|
Adjustments to reconcile net loss to net cash used in operations
|
|
|
|
|
|
||||||
Depreciation of property and equipment
|
3,917
|
|
|
3,686
|
|
|
2,150
|
|
|||
Provision for doubtful accounts (including note receivable)
|
465
|
|
|
725
|
|
|
1,121
|
|
|||
Amortization of patents
|
218
|
|
|
231
|
|
|
171
|
|
|||
Write-off of patent costs
|
733
|
|
|
168
|
|
|
43
|
|
|||
Loss on disposal of property and equipment
|
158
|
|
|
170
|
|
|
121
|
|
|||
Stock-based compensation
|
10,354
|
|
|
12,977
|
|
|
14,718
|
|
|||
Other
|
138
|
|
|
—
|
|
|
—
|
|
|||
Changes in assets and liabilities
|
|
|
|
|
|
||||||
Accounts receivable
|
(5,809
|
)
|
|
7,327
|
|
|
(10,568
|
)
|
|||
Inventories
|
543
|
|
|
(3,474
|
)
|
|
(1,076
|
)
|
|||
Prepaid expenses and other assets
|
(1,823
|
)
|
|
728
|
|
|
(1,183
|
)
|
|||
Accounts payable
|
1,761
|
|
|
(970
|
)
|
|
581
|
|
|||
Accrued expenses and other liabilities
|
725
|
|
|
10,873
|
|
|
4,387
|
|
|||
Deferred revenue
|
10,000
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) operations
|
19,588
|
|
|
(23,583
|
)
|
|
(22,357
|
)
|
|||
Cash flows from investing activities
|
|
||||||||||
Expenditures for property and equipment
|
(981
|
)
|
|
(3,818
|
)
|
|
(20,325
|
)
|
|||
Issuance of convertible note receivable
|
—
|
|
|
(350
|
)
|
|
—
|
|
|||
Purchases of marketable securities
|
—
|
|
|
(37
|
)
|
|
(2,112
|
)
|
|||
Sales of marketable securities
|
46
|
|
|
1,249
|
|
|
365
|
|
|||
Costs incurred in connection with patents
|
(844
|
)
|
|
(813
|
)
|
|
(955
|
)
|
|||
Net cash used in investing activities
|
(1,779
|
)
|
|
(3,769
|
)
|
|
(23,027
|
)
|
|||
Cash flows from financing activities
|
|
||||||||||
Proceeds from the employee stock purchase plan
|
3,254
|
|
|
3,142
|
|
|
2,882
|
|
|||
Exercise of stock options
|
5,263
|
|
|
1,006
|
|
|
2,152
|
|
|||
Payments on borrowings
|
—
|
|
|
—
|
|
|
(2,400
|
)
|
|||
Proceeds from financing
|
20,944
|
|
|
—
|
|
|
—
|
|
|||
Other
|
4
|
|
|
—
|
|
|
—
|
|
|||
Net cash provided by financing activities
|
29,465
|
|
|
4,148
|
|
|
2,634
|
|
|||
Net change in cash and cash equivalents
|
47,274
|
|
|
(23,204
|
)
|
|
(42,750
|
)
|
|||
Cash and cash equivalents
|
|
||||||||||
Beginning of period
|
60,638
|
|
|
83,842
|
|
|
126,592
|
|
|||
End of period
|
$
|
107,912
|
|
|
$
|
60,638
|
|
|
$
|
83,842
|
|
Noncash investing and financing activities
|
|
||||||||||
Change in equipment included in accounts payable
|
$
|
(319
|
)
|
|
$
|
(374
|
)
|
|
$
|
(469
|
)
|
Change in patent costs included in accounts payable
|
$
|
(150
|
)
|
|
$
|
87
|
|
|
$
|
(52
|
)
|
Supplemental cash flow information
|
|
||||||||||
Interest paid
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
Amount
|
||
Balances at June 30, 2014
|
$
|
451
|
|
Provision for doubtful accounts
|
1,121
|
|
|
Write-offs
|
(135
|
)
|
|
Balance at June 30, 2015
|
1,437
|
|
|
Provision for doubtful accounts
|
375
|
|
|
Write-offs
|
(1,100
|
)
|
|
Balance at June 30, 2016
|
712
|
|
|
Provision for doubtful accounts
|
465
|
|
|
Write-offs
|
(313
|
)
|
|
Balance at June 30, 2017
|
$
|
864
|
|
|
Amount
|
||
Balances at June 30, 2014
|
$
|
116
|
|
Provision
|
377
|
|
|
Claims
|
(367
|
)
|
|
Balance at June 30, 2015
|
126
|
|
|
Provision
|
490
|
|
|
Claims
|
(471
|
)
|
|
Balance at June 30, 2016
|
145
|
|
|
Provision
|
1,733
|
|
|
Claims
|
(1,361
|
)
|
|
Balance at June 30, 2017
|
$
|
517
|
|
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Accounts receivable
|
$
|
29,336
|
|
|
$
|
23,840
|
|
Less: Allowance for doubtful accounts
|
(864
|
)
|
|
(712
|
)
|
||
Accounts receivable, net
|
$
|
28,472
|
|
|
$
|
23,128
|
|
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Raw materials
|
$
|
7,898
|
|
|
$
|
7,439
|
|
Work in process
|
1,221
|
|
|
1,142
|
|
||
Finished goods
|
7,778
|
|
|
8,859
|
|
||
Inventories, net
|
$
|
16,897
|
|
|
$
|
17,440
|
|
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Land
|
$
|
500
|
|
|
$
|
500
|
|
Building
|
22,420
|
|
|
22,575
|
|
||
Equipment
|
16,502
|
|
|
14,141
|
|
||
Furniture
|
2,709
|
|
|
2,709
|
|
||
Leasehold improvements
|
86
|
|
|
86
|
|
||
Construction in progress
|
421
|
|
|
1,533
|
|
||
|
42,638
|
|
|
41,544
|
|
||
Less: Accumulated depreciation
|
(12,942
|
)
|
|
(9,073
|
)
|
||
Total Property and equipment, net
|
$
|
29,696
|
|
|
$
|
32,471
|
|
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Patents
|
$
|
6,056
|
|
|
$
|
6,049
|
|
Less: Accumulated amortization
|
(1,000
|
)
|
|
(1,036
|
)
|
||
Total Patents, net
|
$
|
5,056
|
|
|
$
|
5,013
|
|
2018
|
$
|
198
|
|
2019
|
190
|
|
|
2020
|
180
|
|
|
2021
|
180
|
|
|
2022
|
180
|
|
|
Thereafter
|
4,128
|
|
|
|
$
|
5,056
|
|
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Salaries and bonus
|
$
|
8,247
|
|
|
$
|
4,305
|
|
Commissions
|
8,217
|
|
|
7,788
|
|
||
Accrued vacation
|
3,436
|
|
|
3,498
|
|
||
Accrued excise, sales and other taxes
|
3,497
|
|
|
3,372
|
|
||
Accrued litigation
|
2,600
|
|
|
—
|
|
||
Legal settlement
|
1,814
|
|
|
3,872
|
|
||
Clinical studies
|
657
|
|
|
1,757
|
|
||
Restructuring
|
169
|
|
|
1,337
|
|
||
Other accrued expenses
|
1,599
|
|
|
1,064
|
|
||
Total Accrued expenses
|
$
|
30,236
|
|
|
$
|
26,993
|
|
|
Severance
|
||
Restructuring accrual at June 30, 2015
|
$
|
—
|
|
Restructuring charge
(1)
|
2,311
|
|
|
Cash payments
|
(790
|
)
|
|
Restructuring accrual at June 30, 2016
|
1,521
|
|
|
Cash payments
|
(1,330
|
)
|
|
Restructuring accrual at June 30, 2017
|
$
|
191
|
|
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Legal settlement
|
$
|
2,314
|
|
|
$
|
4,128
|
|
Deferred compensation
|
519
|
|
|
684
|
|
||
Deferred grant incentive
|
473
|
|
|
486
|
|
||
Accrued severance
|
99
|
|
|
610
|
|
||
Other liabilities
|
74
|
|
|
102
|
|
||
Total Other liabilities
|
$
|
3,479
|
|
|
$
|
6,010
|
|
2018
|
$
|
1,650
|
|
2019
|
1,699
|
|
|
2020
|
1,750
|
|
|
2021
|
1,803
|
|
|
2022
|
1,857
|
|
|
Thereafter
|
21,287
|
|
|
|
$
|
30,046
|
|
|
As of June 30, 2017
|
||||||||||||
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||
Mutual funds
|
$
|
604
|
|
|
100
|
|
|
—
|
|
|
$
|
704
|
|
Total marketable securities
|
$
|
604
|
|
|
100
|
|
|
—
|
|
|
$
|
704
|
|
|
As of June 30, 2016
|
||||||||||||
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||
Mutual funds
|
$
|
644
|
|
|
40
|
|
|
—
|
|
|
$
|
684
|
|
Total marketable securities
|
$
|
644
|
|
|
40
|
|
|
—
|
|
|
$
|
684
|
|
|
|
|
Fair Value Measurements as of June 30, 2017 Using Inputs Considered as
|
||||||||||
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Mutual funds
|
$
|
704
|
|
|
281
|
|
|
423
|
|
|
$
|
—
|
|
Total marketable securities
|
$
|
704
|
|
|
281
|
|
|
423
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements as of June 30, 2016 Using Inputs Considered as
|
||||||||||
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||
Mutual funds
|
$
|
684
|
|
|
425
|
|
|
259
|
|
|
$
|
—
|
|
Total marketable securities
|
$
|
684
|
|
|
425
|
|
|
259
|
|
|
$
|
—
|
|
|
Number of
Options
|
|
Weighted Average
Exercise Price
|
|||
Options outstanding at June 30, 2014
|
922,809
|
|
|
$
|
10.16
|
|
Exercised
|
(222,937
|
)
|
|
$
|
9.65
|
|
Options outstanding at June 30, 2015
|
699,872
|
|
|
$
|
10.32
|
|
Exercised
|
(87,817
|
)
|
|
$
|
11.46
|
|
Forfeited or expired
|
(5,176
|
)
|
|
$
|
12.37
|
|
Options outstanding at June 30, 2016
|
606,879
|
|
|
$
|
10.14
|
|
Exercised
|
(519,297
|
)
|
|
$
|
10.33
|
|
Expired
|
(9,381
|
)
|
|
$
|
8.83
|
|
Options outstanding at June 30, 2017
|
78,201
|
|
|
$
|
9.07
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Outstanding at June 30, 2014
|
1,169,266
|
|
|
$
|
18.96
|
|
Granted
|
362,072
|
|
|
$
|
30.30
|
|
Forfeited
|
(119,081
|
)
|
|
$
|
21.43
|
|
Vested
|
(569,163
|
)
|
|
$
|
16.46
|
|
Outstanding at June 30, 2015
|
843,094
|
|
|
$
|
25.16
|
|
Granted
|
522,415
|
|
|
$
|
19.30
|
|
Forfeited
|
(230,710
|
)
|
|
$
|
24.83
|
|
Vested
|
(487,226
|
)
|
|
$
|
22.27
|
|
Outstanding at June 30, 2016
|
647,573
|
|
|
$
|
23.24
|
|
Granted
|
258,346
|
|
|
$
|
21.80
|
|
Forfeited
|
(103,140
|
)
|
|
$
|
22.11
|
|
Vested
|
(316,195
|
)
|
|
$
|
24.21
|
|
Outstanding at June 30, 2017
|
486,584
|
|
|
$
|
21.26
|
|
Performance Measurement
|
|
2017
|
|
2016
|
|
2015
|
|||
Total shareholder return
|
|
336,826
|
|
|
156,509
|
|
|
76,112
|
|
Annual revenue growth
|
|
N/A
|
|
|
156,509
|
|
|
76,112
|
|
|
Total Shareholder Return
|
|
Annual Revenue Growth
|
||||||||
|
% Achievement
|
|
Shares Vested
|
|
% Achievement
|
|
Shares Vested
|
||||
Fiscal 2015
|
69
|
%
|
|
26,339
|
|
|
200
|
%
|
|
76,112
|
|
Fiscal 2016
|
—
|
%
|
|
0
|
|
—
|
%
|
|
0
|
|
Number of
Shares |
|
Weighted Average
Grant Date Fair Value |
|||
Outstanding at June 30, 2014
|
107,132
|
|
|
$
|
14.68
|
|
Granted
|
152,224
|
|
|
$
|
22.03
|
|
Vested
|
(107,132
|
)
|
|
$
|
14.68
|
|
Outstanding at June 30, 2015
|
152,224
|
|
|
$
|
22.03
|
|
Granted
|
313,018
|
|
|
$
|
16.67
|
|
Forfeited
|
(52,680
|
)
|
|
$
|
28.64
|
|
Vested
|
(102,451
|
)
|
|
$
|
25.58
|
|
Outstanding at June 30, 2016
|
310,111
|
|
|
$
|
16.67
|
|
Granted
|
336,826
|
|
|
$
|
11.97
|
|
Forfeited
|
(328,353
|
)
|
|
$
|
16.41
|
|
Outstanding at June 30, 2017
|
318,584
|
|
|
$
|
11.97
|
|
|
Number of
Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|||
Restricted stock units outstanding at June 30, 2014
|
296,131
|
|
|
$
|
10.09
|
|
Granted
|
41,172
|
|
|
$
|
29.57
|
|
Converted to common stock
|
(74,360
|
)
|
|
$
|
11.90
|
|
Restricted stock units outstanding at June 30, 2015
|
262,943
|
|
|
$
|
12.62
|
|
Granted
|
47,586
|
|
|
$
|
22.27
|
|
Converted to common stock
|
(5,713
|
)
|
|
$
|
22.18
|
|
Restricted stock units outstanding at June 30, 2016
|
304,816
|
|
|
$
|
13.95
|
|
Granted
|
54,064
|
|
|
$
|
21.21
|
|
Forfeited
|
(2,974
|
)
|
|
$
|
21.01
|
|
Converted to common stock
|
(6,476
|
)
|
|
$
|
29.34
|
|
Restricted stock units outstanding at June 30, 2017
|
349,430
|
|
|
$
|
14.73
|
|
Year Ended June 30, 2017
|
|
Restricted
Stock
Awards
|
|
Employee Stock Purchase Plan
|
|
Restricted
Stock
Units
|
|
Total
|
||||||||
Cost of goods sold
|
|
$
|
588
|
|
|
$
|
101
|
|
|
$
|
—
|
|
|
$
|
689
|
|
Selling, general and administrative
|
|
6,568
|
|
|
1,065
|
|
|
1,024
|
|
|
8,657
|
|
||||
Research and development
|
|
879
|
|
|
129
|
|
|
—
|
|
|
1,008
|
|
||||
Total stock-based compensation expense
|
|
$
|
8,035
|
|
|
$
|
1,295
|
|
|
$
|
1,024
|
|
|
$
|
10,354
|
|
Year Ended June 30, 2016
|
|
Restricted
Stock
Awards
|
|
Employee Stock Purchase Plan
|
|
Restricted
Stock
Units
|
|
Total
|
||||||||
Cost of goods sold
|
|
$
|
679
|
|
|
$
|
115
|
|
|
$
|
—
|
|
|
$
|
794
|
|
Selling, general and administrative
|
|
8,215
|
|
|
1,167
|
|
|
1,000
|
|
|
10,382
|
|
||||
Research and development
|
|
1,681
|
|
|
120
|
|
|
—
|
|
|
1,801
|
|
||||
Total stock-based compensation expense
|
|
$
|
10,575
|
|
|
$
|
1,402
|
|
|
$
|
1,000
|
|
|
$
|
12,977
|
|
Year Ended June 30, 2015
|
|
Restricted Stock Awards
|
|
Employee Stock Purchase Plan
|
|
Restricted
Stock
Units
|
|
Total
|
||||||||
Cost of goods sold
|
|
$
|
937
|
|
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
1,001
|
|
Selling, general and administrative
|
|
10,486
|
|
|
825
|
|
|
917
|
|
|
12,228
|
|
||||
Research and development
|
|
1,388
|
|
|
101
|
|
|
—
|
|
|
1,489
|
|
||||
Total stock-based compensation expense
|
|
$
|
12,811
|
|
|
$
|
990
|
|
|
$
|
917
|
|
|
$
|
14,718
|
|
Shares available for grant at June 30, 2014
|
—
|
|
Reserved
|
2,030,000
|
|
Granted
|
(171,411
|
)
|
Forfeited or cancelled
|
5,866
|
|
Shares available for grant at June 30, 2015
|
1,864,455
|
|
Granted
|
(883,019
|
)
|
Forfeited or cancelled
|
133,499
|
|
Shares available for grant at June 30, 2016
|
1,114,935
|
|
Granted
|
(649,236
|
)
|
Forfeited or cancelled
|
415,700
|
|
Shares available for grant at June 30, 2017
(a)
|
881,399
|
|
(a)
|
Excludes the effect of shares granted, exercised, forfeited or expired related to activity from shares granted outside of the 2014 Plan.
|
|
June 30,
|
||||||
|
2017
|
|
2016
|
||||
Deferred tax assets
|
|
|
|
||||
Stock-based compensation
|
$
|
5,107
|
|
|
$
|
3,375
|
|
Accrued expenses
|
1,650
|
|
|
2,795
|
|
||
Inventories
|
433
|
|
|
382
|
|
||
Compensation accruals
|
261
|
|
|
254
|
|
||
Depreciation and amortization
|
409
|
|
|
360
|
|
||
Other
|
1,019
|
|
|
487
|
|
||
Research and development credit carryforwards
|
4,650
|
|
|
4,483
|
|
||
Net operating loss carryforwards
|
87,502
|
|
|
89,081
|
|
||
Total deferred tax assets
|
101,031
|
|
|
101,217
|
|
||
Valuation allowance
|
(101,031
|
)
|
|
(101,217
|
)
|
||
Net deferred tax assets
|
$
|
—
|
|
|
$
|
—
|
|
Balances at June 30, 2014
|
$
|
68,699
|
|
Additions
|
15,620
|
|
|
Balance at June 30, 2015
|
84,319
|
|
|
Additions
|
16,898
|
|
|
Balance at June 30, 2016
|
101,217
|
|
|
Reductions
|
(186
|
)
|
|
Balance at June 30, 2017
|
$
|
101,031
|
|
Balances at June 30, 2014
|
$
|
458
|
|
Increases related to prior year tax positions
|
4
|
|
|
Increases related to current year tax positions
|
32
|
|
|
Balances at June 30, 2015
|
494
|
|
|
Increases related to prior year tax positions
|
10
|
|
|
Increases related to current year tax positions
|
41
|
|
|
Balance at June 30, 2016
|
545
|
|
|
Decreases related to prior year tax positions
|
(8
|
)
|
|
Increases related to current year tax positions
|
33
|
|
|
Balance at June 30, 2017
|
$
|
570
|
|
2018
|
$
|
551
|
|
2019
|
472
|
|
|
2020
|
354
|
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
1,377
|
|
|
Year Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Interest expense
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
23
|
|
Interest income
|
(383
|
)
|
|
(163
|
)
|
|
(63
|
)
|
|||
Other
|
47
|
|
|
18
|
|
|
111
|
|
|||
Total Other (income) and expense, net
|
$
|
164
|
|
|
$
|
(145
|
)
|
|
$
|
71
|
|
|
Year Ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Numerator
|
|
|
|
|
|
||||||
Net loss
|
$
|
(1,792
|
)
|
|
$
|
(56,024
|
)
|
|
$
|
(32,822
|
)
|
Denominator
|
|
|
|
|
|
||||||
Weighted average common shares outstanding — basic
|
32,373,709
|
|
|
32,537,621
|
|
|
31,547,711
|
|
|||
Effect of dilutive stock options
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Effect of dilutive restricted stock units
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Effect of performance-based restricted stock awards
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average common shares outstanding — diluted
|
32,373,709
|
|
|
32,537,621
|
|
|
31,547,711
|
|
|||
Earnings per common share — basic and diluted
|
$
|
(0.06
|
)
|
|
$
|
(1.72
|
)
|
|
$
|
(1.04
|
)
|
(1)
|
At
June 30, 2017
,
2016
, and
2015
;
78,201
,
606,879
, and
699,872
stock options, respectively, were outstanding. The effect of the shares that would be issued upon exercise of these options has been excluded from the calculation of diluted loss per share because those shares are anti-dilutive.
|
(2)
|
At
June 30, 2017
,
2016
, and
2015
;
349,430
,
304,816
and
262,943
additional shares of common stock, respectively, were issuable upon the settlement of outstanding restricted stock units. The effect of the shares that would be issued upon settlement of these restricted stock units has been excluded from the calculation of diluted loss per share because those shares are anti-dilutive.
|
(3)
|
At
June 30, 2017
,
318,584
performance-based restricted stock awards were outstanding. The effect of the shares that would be issued upon vesting of these awards has been excluded from the calculation of diluted loss per share because those shares are anti-dilutive.
|
|
2017
|
||||||||||||||||||
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Total
|
||||||||||
Net revenue
|
$
|
49,800
|
|
|
$
|
50,043
|
|
|
$
|
52,144
|
|
|
$
|
52,919
|
|
|
$
|
204,906
|
|
Gross profit
|
$
|
40,334
|
|
|
$
|
40,880
|
|
|
$
|
41,005
|
|
|
$
|
43,246
|
|
|
$
|
165,465
|
|
Net income (loss)
|
$
|
(1,858
|
)
|
|
$
|
1,043
|
|
|
$
|
(1,749
|
)
|
|
$
|
772
|
|
|
$
|
(1,792
|
)
|
Earnings per common share - basic(1)
|
$
|
(0.06
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.06
|
)
|
Earnings per common share - diluted(1)
|
$
|
(0.06
|
)
|
|
$
|
0.03
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.02
|
|
|
$
|
(0.06
|
)
|
|
2016
|
||||||||||||||||||
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Total
|
||||||||||
Net revenue
|
$
|
43,871
|
|
|
$
|
41,392
|
|
|
$
|
44,461
|
|
|
$
|
48,460
|
|
|
$
|
178,184
|
|
Gross profit
|
$
|
35,100
|
|
|
$
|
33,321
|
|
|
$
|
35,736
|
|
|
$
|
38,606
|
|
|
$
|
142,763
|
|
Net loss
|
$
|
(13,261
|
)
|
|
$
|
(15,163
|
)
|
|
$
|
(22,716
|
)
|
|
$
|
(4,884
|
)
|
|
$
|
(56,024
|
)
|
Earnings per common share (basic and diluted)
(1)
|
$
|
(0.41
|
)
|
|
$
|
(0.47
|
)
|
|
$
|
(0.69
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(1.72
|
)
|
(1)
|
Financial Statements. The following financial statements are included in Part II, Item 8 of this Annual Report on Form 10-K:
|
•
|
Report of Independent Registered Public Accounting Firm
|
•
|
Consolidated Balance Sheets as of
June 30, 2017
and
2016
|
•
|
Consolidated Statements of Operations for the years ended
June 30, 2017
,
2016
and
2015
|
•
|
Consolidated Statements of Comprehensive Loss for the years ended
June 30, 2017
,
2016
and
2015
|
•
|
Consolidated Statements of Stockholders’ Equity for the years ended
June 30, 2017
,
2016
and
2015
|
•
|
Consolidated Statements of Cash Flows for the years ended
June 30, 2017
,
2016
and
2015
|
•
|
Notes to Consolidated Financial Statements
|
•
|
All financial statement schedules have been omitted, because they are not applicable, are not required, or the information is included in the Financial Statements or Notes thereto
|
|
CARDIOVASCULAR SYSTEMS, INC.
|
||
|
|
|
|
Date: August 24, 2017
|
By:
|
|
/s/ Scott R. Ward
|
|
|
|
Scott R. Ward
|
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Scott R. Ward
|
|
Chairman, President and Chief Executive Officer(principal executive officer)
|
|
August 24, 2017
|
Scott R. Ward
|
|
|
||
|
|
|
||
/s/ Laurence L. Betterley
|
|
Chief Financial Officer (principal
financial and accounting officer)
|
|
August 24, 2017
|
Laurence L. Betterley
|
|
|
||
|
|
|
||
/s/ Martha Goldberg Aronson
|
|
Director
|
|
August 24, 2017
|
Martha Goldberg Aronson
|
|
|
||
|
|
|
||
/s/ Scott Bartos
|
|
Director
|
|
August 24, 2017
|
Scott Bartos
|
|
|
||
|
|
|
||
/s/ Brent G. Blackey
|
|
Director
|
|
August 24, 2017
|
Brent G. Blackey
|
|
|
||
|
|
|
||
/s/ Edward Brown
|
|
Director
|
|
August 24, 2017
|
Edward Brown
|
|
|
||
|
|
|
||
/s/ William E. Cohn
|
|
Director
|
|
August 24, 2017
|
William E. Cohn
|
|
|
||
|
|
|
||
/s/ Augustine Lawlor
|
|
Director
|
|
August 24, 2017
|
Augustine Lawlor
|
|
|
||
|
|
|
Exhibit
No.
|
|
Description
|
3.1
|
|
Restated Certificate of Incorporation, as amended (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 14, 2009).
|
3.2
|
|
Amended and Restated Bylaws (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed on May 21, 2015).
|
4.1
|
|
Specimen Common Stock Certificate (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed on March 3, 2009).
|
4.2
|
|
Registration Rights Agreement by and among Cardiovascular Systems, Inc. and certain of its stockholders, dated as of March 16, 2009 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed on March 18, 2009).
|
10.1†
|
|
Employment Agreement, dated April 7, 2008, by and between Cardiovascular Systems, Inc., a Minnesota corporation, and Laurence L. Betterley (previously filed with the SEC as an Exhibit to and incorporated herein by reference from CSI Minnesota, Inc.’s Registration Statement on Form S-1/A, File No. 333-148798, filed April 18, 2008).
|
10.2†
|
|
Employment Agreement, dated May 9, 2011, by and between Cardiovascular Systems, Inc. and Kevin J. Kenny (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed September 12, 2011).
|
10.3†
|
|
Form of Standard Employment Agreement (previously filed with the SEC as an Exhibit to and incorporated herein by reference from CSI Minnesota, Inc.’s Registration Statement on Form S-1, File No. 333-148798, filed January 22, 2008).
|
10.4†*
|
|
Fiscal Year 2018 Executive Officer Base Salaries.
|
10.5†*
|
|
Fiscal 2018 Executive Officer Bonus Plan and Equity Compensation.
|
10.6†*
|
|
Fiscal Year 2018 Director Compensation Arrangements.
|
10.7†
|
|
Form of Director and Officer Indemnification Agreement (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 14, 2009).
|
10.8†
|
|
Cardiovascular Systems, Inc. Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Registration Statement on Form S-8, File No. 333-158755, filed April 24, 3009).
|
10.9†
|
|
Form of Incentive Stock Option Agreement under the Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 14, 2009).
|
10.10†
|
|
Form of Non-Qualified Stock Option Agreement under the Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 14, 2009).
|
10.11†
|
|
Form of Restricted Stock Agreement under the Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed on September 12, 2011).
|
10.12†
|
|
Form of Restricted Stock Unit Agreement under the Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed on September 12, 2011).
|
10.13†
|
|
Form of Performance Share Award under the Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 14, 2009).
|
10.14†
|
|
Form of Performance Unit Award under the Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 14, 2009).
|
Exhibit
No.
|
|
Description
|
10.15†
|
|
Form of Stock Appreciation Rights Agreement under the Amended and Restated 2007 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 14, 2009).
|
10.16†
|
|
2003 Stock Option Plan of Cardiovascular Systems, Inc., a Minnesota corporation, as amended (previously filed with the SEC as an Exhibit to and incorporated herein by reference from CSI Minnesota, Inc.’s Registration Statement on Form S-1, File No. 333-148798, filed January 22, 2008).
|
10.17†
|
|
Form of Incentive Stock Option Agreement under the 2003 Stock Option Plan of Cardiovascular Systems, Inc., a Minnesota corporation (previously filed with the SEC as an Exhibit to and incorporated herein by reference from CSI Minnesota, Inc.’s Registration Statement on Form S-1, File No. 333-148798, filed January 22, 2008).
|
10.18†
|
|
Form of Nonqualified Stock Option Agreement under the 2003 Stock Option Plan of Cardiovascular Systems, Inc., a Minnesota corporation (previously filed with the SEC as an Exhibit to and incorporated herein by reference from CSI Minnesota, Inc.’s Registration Statement on Form S-1, File No. 333-148798, filed January 22, 2008).
|
10.19
|
|
Corporate Job Creation Agreement between Pearland Economic Development Corporation and Cardiovascular Systems, Inc., dated June 17, 2009 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed on September 28, 2009).
|
10.20
|
|
Build-To-Suit Lease Agreement between Pearland Economic Development Corporation and Cardiovascular Systems, Inc., dated September 9, 2009 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed on September 28, 2009).
|
10.21+
|
|
Supply Agreement, between Cardiovascular Systems, Inc. and Fresenius Kabi AB, effective April 4, 2011 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed on May 13, 2011).
|
10.22
|
|
Amendment to Corporate Job Creation Agreement, dated effective July 2, 2012, by and between the Company and Pearland Economic Development Corporation (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed September 10, 2012).
|
10.23†
|
|
Amendment to Employment Agreement, dated December 31, 2012, by and between the Company and Laurence L. Betterley (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 8, 2013).
|
10.24†
|
|
Amendment to Employment Agreement, dated December 31, 2012, by and between the Company and Kevin J. Kenny (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 8, 2013).
|
10.25†
|
|
Cardiovascular Systems, Inc. Deferred Compensation Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed December 17, 2013).
|
10.26+
|
|
Purchasing Agreement, effective August 1, 2014, between Cardiovascular Systems, Inc. and Healthtrust Purchasing Group, L.P (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 28, 2014).
|
10.27
|
|
Development Services Agreement, dated June 11, 2014, by and between Cardiovascular Systems, Inc. and Ryan Companies US, Inc. (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 28, 2014).
|
10.28
|
|
Contract for Private Redevelopment, dated June 11, 2014, by and among Cardiovascular Systems, Inc., Ryan Companies US, Inc. and The City of New Brighton (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 28, 2014).
|
10.29
|
|
Design Build Cost Plus Construction Contract, dated June 11, 2014, by and between Cardiovascular Systems, Inc. and Ryan Companies US, Inc. (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 28, 2014).
|
10.30†
|
|
Cardiovascular Systems, Inc. 2014 Equity Incentive Plan, as amended (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 27, 2015).
|
10.31†
|
|
Form of Restricted Stock Agreement for Time-Based Awards under the 2014 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 6, 2015).
|
10.32†
|
|
Form of Restricted Stock Agreement for Performance-Based Awards under the 2014 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 6, 2015).
|
Exhibit
No.
|
|
Description
|
10.33†
|
|
Amendment No. 2 to Employment Agreement, dated February 4, 2015, by and between Cardiovascular Systems Inc. and Kevin J. Kenny (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 8, 2015).
|
10.34†
|
|
Cardiovascular Systems, Inc. Amended Executive Officer Severance Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 25, 2016).
|
10.35†
|
|
Form of Restricted Stock Unit Agreement under the 2014 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 8, 2015).
|
10.36†
|
|
Form of Restricted Stock Agreement under the 2014 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 8, 2015).
|
10.37†
|
|
Cardiovascular Systems, Inc. 2015 Employee Stock Purchase Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed November 19, 2015).
|
10.38†
|
|
Employment Letter, dated November 30, 2015 by and between Cardiovascular Systems, Inc. and Scott R. Ward (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 2, 2016).
|
10.39
|
|
Confidentiality and Assignment of Inventions Agreement, dated November 30, 2015, by and between Cardiovascular Systems, Inc. and Scott R. Ward (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 2, 2016).
|
10.40
|
|
Separation Agreement, between Cardiovascular Systems, Inc. and David Martin, dated February 26, 2016 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed February 29, 2016).
|
10.41
|
|
Amendment No. 1 to Supply Agreement, between Cardiovascular Systems, Inc. and Fresenius Kabi AB, effective March 17, 2016 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 6, 2016).
|
10.42+
|
|
Amendment No. 1 to Product Schedule, between Cardiovascular Systems, Inc. and Fresenius Kabi AB, effective March 27, 2016 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 6, 2016).
|
10.43†
|
|
Separation Agreement, between Cardiovascular Systems, Inc. and Robert Thatcher, dated May 26, 2016 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 25, 2016).
|
10.44
|
|
Settlement Agreement, among Cardiovascular Systems, Inc., the United States of America acting through the United States Attorney for the Western District of North Carolina and on behalf of the Office of Inspector General of the Department of Health and Human Services, and Travis Thams, dated June 28, 2016 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed June 28, 2016).
|
10.45
|
|
Corporate Integrity Agreement, between Cardiovascular Systems, Inc. and the Office of Inspector General of the Department of Health and Human Services, dated June 28, 2016 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Current Report on Form 8-K filed June 28, 2016).
|
10.46†*
|
|
Form of Performance Unit Award (Cash Settled) under the 2014 Equity Incentive Plan.
|
10.47†
|
|
Form of Restricted Stock Agreement for Performance-Based Awards (3-year cliff vesting) under the 2014 Equity Incentive Plan (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 25, 2016).
|
10.48†
|
|
Employment Agreement, dated August 15, 2016, by and between Cardiovascular Systems Inc. and Scott R. Ward (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Annual Report on Form 10-K filed August 25, 2016).
|
10.49
|
|
Purchase and Sale Agreement by and between Cardiovascular Systems, Inc. and Krishna Holdings, LLC dated December 29, 2016 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 3, 2017).
|
10.50
|
|
First Amendment to Purchase and Sale Agreement, by and between Cardiovascular Systems, Inc. and Krishna Holdings, LLC, dated February 2, 2017 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 3, 2017).
|
10.51
|
|
Second Amendment to Purchase and Sale Agreement, by and between Cardiovascular Systems, Inc. and Krishna Holdings, LLC, dated February 15, 2017 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 5, 2017).
|
Exhibit
No. |
|
Description
|
10.52
|
|
Third Amendment to Purchase and Sale Agreement, by and between Cardiovascular Systems, Inc. and Krishna Holdings, LLC, dated February 23, 2017 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 5, 2017).
|
10.53
|
|
Fourth Amendment to Purchase and Sale Agreement, by and between Cardiovascular Systems, Inc. and Krishna Holdings, LLC, dated March 1, 2017 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 5, 2017).
|
10.54
|
|
Lease Agreement, by and between Cardiovascular Systems, Inc. and Krishna Holdings, LLC, Apex Holdings, LLC, Kashi Associates, LLC, Keva Holdings, LLC, S&V Ventures, LLC, Polo Group LLC, SPAV Holdings LLC, Star Associates LLC, and The Global Villa, LLC, dated March 30, 2017 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 5, 2017).
|
10.55
|
|
Loan and Security Agreement, by and between Cardiovascular Systems, Inc. and Silicon Valley Bank, dated March 31, 2017 (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed May 5, 2017).
|
10.56
|
|
Amendment to Purchasing Agreement between Cardiovascular Systems, Inc. and Healthtrust Purchasing Group, L.P. (previously filed with the SEC as an Exhibit to and incorporated herein by reference from the Company’s Quarterly Report on Form 10-Q filed February 3, 2017).
|
10.57*
|
|
Amendment to Purchasing Agreement between Cardiovascular Systems, Inc. and Healthtrust Purchasing Group, L.P.
|
10.58†*
|
|
Separation Agreement, between Cardiovascular Systems, Inc. and Paul Koehn, dated June 30, 2017.
|
23.1*
|
|
Consent of PricewaterhouseCoopers LLP.
|
24.1*
|
|
Power of Attorney (included on the signature page).
|
31.1*
|
|
Certification of principal executive officer required by Rule 13a-14(a).
|
31.2*
|
|
Certification of principal financial officer required by Rule 13a-14(a).
|
32.1**
|
|
Section 1350 Certification of principal executive officer.
|
32.2**
|
|
Section 1350 Certification of principal financial officer.
|
101**
|
|
Financial statements from the Annual Report on Form 10-K of the Company for the year ended June 30, 2017, formatted, in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
†
|
Compensatory plan or agreement.
|
+
|
Confidential treatment has been granted for certain portions omitted from this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
|
Name/Title
|
|
FY2018 Salary
|
|
|||
Scott R. Ward
Chairman, President and Chief Executive Officer
|
|
|
$
|
650,000
|
|
|
Laurence L. Betterley
Chief Financial Officer
|
|
|
$
|
379,212
|
|
|
Kevin Kenny
Chief Operating Officer |
|
|
$
|
430,000
|
|
|
Laura Gillund
Chief Talent Officer
|
|
|
$
|
312,530
|
|
|
Alexander Rosenstein
General Counsel and Corporate Secretary |
|
|
$
|
283,592
|
|
|
Sandra Sedo
Chief Compliance Officer
|
|
|
$
|
272,700
|
|
|
Name/Title
|
|
Time-Based
|
|
Shareholder Return
|
||
Scott R. Ward
Chairman, President and Chief Executive Officer
|
|
31,432
|
|
|
94,295
|
|
Laurence L. Betterley
Chief Financial Officer
|
|
11,003
|
|
|
33,007
|
|
Kevin Kenny
Chief Operating Officer |
|
12,476
|
|
|
37,428
|
|
Laura Gillund
Chief Talent Officer
|
|
5,038
|
|
|
15,113
|
|
Alexander Rosenstein
General Counsel and Corporate Secretary |
|
4,572
|
|
|
13,714
|
|
Sandra Sedo
Chief Compliance Officer
|
|
4,396
|
|
|
13,187
|
|
●
|
|
|
Retainers of $45,000 for service as a board member; $20,000 for service as a chairman of a board committee; $10,000 for service as a member of a board committee; and $1,200 per board or committee meeting attended in the event that more than twelve of such meetings are held during the period. Directors may irrevocably elect, in advance of each fiscal year, to receive these fees in cash, in common stock of the Company or a combination thereof, or in restricted stock units (“RSUs”). Each director electing to receive fees in RSUs shall at the time of such election also irrevocably select the date of settlement of the RSU. On the settlement date, RSUs may be settled, at the Company’s discretion, in cash or in shares of common stock or a combination thereof.
|
●
|
|
|
An RSU award with a value of $125,000 payable, in the Company’s discretion, in cash or in shares of common stock. The Company will provide for the RSU payment, whether paid in cash or shares of common stock, to be made (in a lump sum if paid in cash) within 30 days following the six-month anniversary of the termination of the director’s board membership.
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
•
|
I have read this Separation Agreement and Release carefully.
|
•
|
I understand and agree to all of the terms of the Separation Agreement and Release.
|
•
|
I am knowingly and voluntarily releasing my claims against CSI and the other persons and entities defined as the Released Parties.
|
•
|
I have not, in signing this Agreement, relied upon any statements or explanations made by CSI except as for those specifically set forth in this Separation Agreement and Release.
|
•
|
I intend this Separation Agreement and Release to be legally binding.
|
•
|
I am signing this Separation Agreement and Release on or after my last day of employment with CSI.
|
1.
|
I have reviewed this annual report on Form 10-K of Cardiovascular Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Scott R. Ward
|
Scott R. Ward
Chairman, President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Cardiovascular Systems, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Laurence L. Betterley
|
Laurence L. Betterley
Chief Financial Officer
|
/s/ Scott R. Ward
|
Scott R. Ward
Chairman, President and Chief Executive Officer
|
By:
/s/ Laurence L. Betterley
|
Laurence L. Betterley
|
Chief Financial Officer
|