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| Diamondback 360 system--Courtesy of Cardiovascular Systems |
Cardiovascular Systems ($CSII), a St. Paul, MN-based devicemaker, said it will trim about 8% of its workforce as part of the company's efforts to balance cash flow and return to profitability.
According to the company's LinkedIn page, between 500 and 1,000 people work at Cardiovascular. Jack Nielson, a Cardiovascular spokesman, declined to disclose the number of people to be let go when contacted by FierceMedicalDevices.
News of the layoffs was included in a press release announcing that the company's third-quarter sales numbers will beat both its own forecast and the consensus on Wall Street. The company said it expects to post sales of between $43.5 million to $44 million for the three months ended yesterday. That's about 4% to 5% higher than it previously forecast. Wall Street insiders expected sales for the period of $41 million.
Shares of Cardiovascular bolted from a closing price of $10.37 per share yesterday, to $13.10 in early trading today. The 52-week high is $41.28. The company is scheduled to release its full Q3 numbers May 4.
"Our immediate focus is to stabilize our sales force and resume sequential quarterly revenue growth," Scott Ward, Cardiovascular's interim president and CEO, said in a statement. "We also discussed our longer term effort of positioning CSI for profitability and positive cash flow. The restructuring announced today is a significant step in achieving these goals."
It's been a difficult quarter for the company. Former CEO David Martin stepped down following a cancer diagnosis and the company said it would take an $8 million charge to cover costs related to a settlement of a False Claims Act lawsuit that was spawned by allegations from a former sales representative that Cardiovascular engaged in kickbacks and off-label marketing as part of a scheme to bolster sales of its orbital atherectomy devices.
Both the departure of Martin and the upcoming round of layoffs will result in a $4.5 million charge reflected in Q3 financials, the company said.
Competition began to heat up for Cardiovascular two years ago when Boston Scientific ($BSX) purchased Bayer's device unit at a time when Wall Street thought Cardiovascular itself would be a buyout target.
Cardiovascular makes the Stealth 360 and Diamondback 360 Peripheral Orbital Atherectomy System as well as the Diamondback 360 Coronary Orbital Atherectomy System used to treat coronary artery disease. The Diamondback for peripheral artery disease reduces the need for amputations and enables access to arteries in the foot and ankle that were previously difficult to treat.
- here's the release