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Cardiovascular Systems Inc (NASDAQ:CSII)
Q4 2020 Earnings Call
Aug 4, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Cardiovascular Systems, Inc. Fiscal Year 2020 Fourth Quarter Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Jack Nielsen, Vice President, Investor Relations and Corporate Communications. Thank you. Please go ahead, sir.

John E. Nielsen -- Vice President, Investor Relations & Corporate Communications

Thank you, Christine. Good afternoon and welcome to our fiscal 2020 fourth quarter conference call. With me today are Scott Ward, CSI Chairman, President and Chief Executive Officer; Rhonda Robb, Operating Officer; Jeff Points, Chief Financial Officer; and Dr. Ryan Egeland, Chief Medical Officer.

Approximately 30 minutes ago, we issued a press release announcing our full year and fiscal 2020 fourth quarter results. You may find a copy of this release on our Investor Relations section of our corporate website. Here you may also find an earnings presentation that includes additional details on our performance and outlook. In a few moments, CSI management will discuss results for our fourth quarter, which ended on June 20 -- June 30, 2020. After our prepared remarks, we will entertain your questions.

During today's call, we will make forward-looking statements. These forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and include statements regarding CSI's future financial and operating results or other statements that are not historical facts. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those described in our most recent Form 10-K and subsequent quarterly reports on Form 10-Q.

In particular, the COVID-19 pandemic has created risks and uncertainties for our business, results of operations, financial condition and prospects, which we will discuss on this call. CSI disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments or otherwise. We will also refer to non-GAAP measures, because we believe they provide useful information for our investors. Today's press release contains a reconciliation to GAAP results.

I will now turn the call over to Scott Ward.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Jack. Good afternoon, everyone, and thank you for joining us today. I hope that you and your families are healthy and are continuing to successfully navigate this pandemic. Today, we reported Q4 revenue of $42.5 million, a decline of 38% compared to last year. The quarter came in better than expected and we are encouraged that our revenues steadily improve throughout the quarter. We are very proud of how our company has responded to the coronavirus crisis. Our customers will never forget how we engage them and responded to their needs, how we continued to support cases occasionally against lots, how we took action to protect their safety and how we offered education programs to help them optimize care and financially survive during a pandemic. CSI came together as a community to assure that our customers knew we stood with them throughout this crisis. We enhanced our brand during Q4 and our customers have been exceedingly grateful for our support.

For the quarter, worldwide peripheral revenue decreased 36% to $30.6 million and performed better than expected. Hospital-based critical limb ischemia and limb salvage programs remained active throughout the quarter and the treatment of claudicant patients is rebounding as hospitals are performing more elective procedures. In addition, office-based labs have helped lead the recovery in our average daily sales and we believe that they will play an increasingly important role in the treatment of peripheral artery disease going forward.

Fourth quarter worldwide coronary revenue decreased 41% to $11.9 million. At the outset of the pandemic, there was a well documented decline in STEMI activations. Patients had so much anxiety about contracting the virus that they avoided hospitals and stayed home even when they were having a heart attack. Consistent with our expectations, cath lab capacity and referral channels are slowly ramping backup and we anticipate coronary procedures will steadily improve throughout the remainder of the calendar year. The recovery has been asymmetric across the United States with a stronger improvement in the South and West regions of the country. Although, there has been a recent surge in coronavirus cases, it seems that healthcare facilities around the country have adapted and are successfully performing both elective and emergent procedures, while simultaneously caring for patients hospitalized with COVID-19. So the chaos we experienced in March and April has begun to subside and the recovery is now under way.

Due to the steady improvement in our volumes in May, June and July, we have increased confidence in our ability to forecast sales and we have issued guidance for Q1 revenue in the range of $55 million to $58 million. In issuing this guidance, we have considered a number of favorable and unfavorable factors that will influence our revenue, but taken in total, we think our revenue will rebound to approximately 85% to 90% of prior year sales. In a moment, Rhonda will provide additional information regarding our R&D pipeline and commercial progress, but first, I will ask Jeff to provide you with additional details regarding our financial results and our first quarter revenue guidance. Jeff?

Jeffrey S. Points -- Chief Financial Officer

Thank you, Scott. Good afternoon, everyone. As Scott mentioned, fourth quarter revenue of $42.5 million represented a 38% decrease compared to last year. In total, we sold nearly 14,500 atherectomy devices during the quarter, representing a 37% decrease compared to last year. Worldwide peripheral revenue decreased 36% to $30.6 million. Worldwide coronary revenue decreased 41% to $11.9 million. The revenue generated in the U.S. and international markets was as follows. Total U.S. revenue decreased 38% to $40.5 million. Domestically, peripheral unit volumes decreased 35%. Domestic coronary revenues declined 44% from last year, primarily driven by lower atherectomy unit volumes.

International revenue decreased 17% to $2.1 million. Travel restrictions and our inability to support new accounts has slowed our progress in international markets. In Q4, gross profit margin dipped to 76% as a result of lower volumes. Operating expenses of $47.1 million, decreased $6.4 million or 12% compared to last year. SG&A declined $9 million compared to last year due to lower sales and other incentive compensation as well as actions taken to reduce variable spending. R&D expenses increased approximately $2.4 million versus last year and includes a non-cash charge of $3.3 million related to patents within our product portfolio and pipeline that are no longer tied to current or future commercial activities.

As you know, we have a growing portfolio of over 220 patents for orbital atherectomy and products in development. This non-cash charge was partially offset by lower expenses related to the pausing of our ECLIPSE clinical trial. Fourth quarter net loss was $15.2 million. Adjusted EBITDA was a negative $10.6 million. On the balance sheet, we ended the quarter with over $232 million in cash and marketable securities and no long-term debt. The increase in our cash position compared to Q3 was related to an equity issuance in June where we raised $135 million in net proceeds. This issuance further strengthens our balance sheet and ensures we remain well capitalized throughout the recovery of the pandemic.

For the fiscal year ended June 30, 2020, revenues declined 4.6% to $236.5 million. Gross margin remained strong, but decreased slightly to 79.4% compared to 80.8% in the prior year, primarily driven by growth in lower margin segments such as office-based labs, interventional support devices and international, along with lower volumes caused by the pandemic. Operating expenses increased $13.4 million or 6.7% to $214.6 million. Net loss was $27.2 million or $0.79 per basic and diluted share for the full year compared to a net loss of $0.3 million or $0.01 per basic and diluted share in the prior year.

That concludes my review of Q4 and full year financial results. I will now provide some commentary on what to expect for the first quarter of fiscal '21. As we discussed our expectations for Q1, please note that we remain in a very dynamic environment and along with the rest of the country we continue to monitor the many models that predict various scenarios for the severity and duration of the COVID-19 outbreak. However, as Scott mentioned, procedure volumes steadily improved throughout Q4 and even into July as hospitals resume emergent and elective procedures. We believe this trend will continue and we are forecasting a strong sequential increase in revenues for Q1 compared to Q4.

Our first quarter revenue guidance of $55 million to $58 million represents sequential revenue growth of 29% or 36% compared to Q4. This range also represents approximately 85% to 90% of our Q1 revenue one year ago. In addition, our international business, especially operations outside of Japan, are expected to continue to be negatively impacted by the pandemic. As a result, we expect international revenue may slightly decline over the next few quarters. Similar to Q4, our anticipated reduction of volumes in Q1 compared to the prior year will have a modestly negative impact on gross margin. We call that a significant portion of our cost of goods sold is related to burden. A fewer devices manufactured is expected to result in gross margins approximately equal to Q4 at 76% to 77%.

In total, we expect operating expenses in Q1 to range between $50 million and $52 million. This represents a decline of approximately 10% to 13% from the prior year. Until procedure volumes return to normal levels, we intend to maintain several of the business continuity plans we implemented in March, which reduced operating expenses and capital expenditures across the business. Active management of operating expenses combined with a strong balance sheet positions CSI to manage through this challenging time and remain poised to resume our double-digit growth trajectory as elective and non-urgent procedures return to previous levels.

Rhonda will now discuss our commercial developments. Rhonda?

Rhonda J. Robb -- Chief Operating Officer

Great. Thank you, Jeff, and good afternoon, everyone. As Scott mentioned, we have increased our efforts to serve our customers and support our patients throughout the pandemic. We've supported cases and consistently delivered high quality products and services to our customers. We expanded our digital footprint in all communications and increased customer engagement. Our updated Take A Stand website launched a physician finder so that patients can locate physicians in their community performing limb salvage procedures throughout the pandemic. In Q4, 3,200 patients click through to identify a physician.

Our field sales representatives and CSI executives have remained in close contact with each of our customers to understand their needs. These frequent conversations enable CSI to meet each one of our customers where they need us. During the quarter, we took action to assure the safety of our employees, customers and their teams. Lower procedure volumes due to the pandemic reduced cash flow at many facilities. We responded by offering expanded pricing and contracting programs to help facilities faced with near-term financial constraints. Our field sales representatives are also increasingly supporting cases in person and virtually, flexing to the needs of each individual physician that we serve.

Demand for professional education programs increased dramatically. During the fourth quarter, over 1,200 physicians attended our virtual programs, nearly 3 times our normal course attendance. In many cases, we partnered with societies to develop specialized content, content we knew our customers desired. For example, we partnered with OEIS to deliver educational programming to help our customers understand the financial resources available through COVID and operating of an outpatient lab in the wake of a pandemic.

With IF CBS we developed a program specific to managing limb salvage during a pandemic. With SCAI, we produced a new coronary program and in a total, we are encouraged by the level of engagement and interest in our professional education programs. We look to expand these efforts and to continue to leverage virtual education programs going forward. Each of these actions strengthened our brand and demonstrated to our customers that CSI remains a key partner in the care of their patients.

During Q4, we also demonstrated how innovation can help physicians effectively treat their patients. In peripheral, our low profile devices that allow for a variety of access points are resonating with physicians seeking to treat peripheral lesions, while reducing procedure time and bleeding complications related to traditional femoral access. As a result, we are seeing increased interest in the use of radial access and other alternate sites of access that reduce bleeding complications and accelerate time to ambulation. We anticipate further adoption to enhance the consistent flow of patients from intake through discharge.

Last week, at the New Cardiovascular Horizons or NCVH conference, data from our REACH peripheral study was shared virtually as a late-breaker. REACH demonstrated that the use of orbital atherectomy in radial peripheral vascular interventions has a high rate of procedural and treatment success and is effective in reducing residual stenosis across all lesions. 98% of patients achieved procedural and treatment success and were no reports of serious transradial access related events. Additionally, the study demonstrate a shorter recovery time and length of stay, which are key factors in patients satisfaction at a particular interest during this pandemic.

During the quarter, we also found that physicians are increasingly interested in performing full leg revascularization in one procedure. Our exchangeable platform with GlideAssist offers a low profile device designed to access the vasculature through multiple access points. This platform is designed to serve up to 50% of the peripheral patients that have multi-vessel disease throughout the leg. Exchangeable enables the use of up to three crowns so that our physician can treat lesions above and below the knee and provide full-leg revascularization in an efficient single procedure. This product is being well received by physicians and their patients who will be motivated to complete treatment in a single session as opposed to scheduling multiple interventions. Exchangeable is sold at a premium and helped drive an increase in our hospital peripheral ASPs during the fourth quarter.

We also made progress in one of our longer term innovation projects. In Q4, we successfully completed a pre-submission meeting with FDA on our pVAD EFS study protocol. We remain cognizant of the AHA data presented last fall in the high-risk PCI support space and believe this may increase the number of patients and lengthen the follow up requirements in our pivotal IDE study. Nevertheless, we are pleased with the alignment and the process that is developing with FDA and we continue to target first in human late in fiscal '21.

Turning to our patent efforts. One year ago, we set out to invalidate three key patents related to the development of an IVL system. In July, the Patent Trial and Appeal Board issued its final rulings and invalidated 50 out of the 51 challenge claims across three key IVL patents. Our successful IP challenge provide CSI the optionality to pursue development of an IVL system at our discretion. In sum, we've strengthened our business and brand in a number of important areas that position CSI to resume double-digit revenue growth and expand our market leadership position during fiscal 2021 and beyond.

Turning to our key revenue drivers in the first half of fiscal '21. I previously mentioned our innovation in peripheral with our radial and exchangeable platforms. We will continue to demonstrate the benefit of these products going forward. This fall, we will also being offering peripheral support devices when we launched the WIRION embolic protection device. We like this filter because it is the only distal embolic filter that can be used with any commercially available peripheral atherectomy system to capture all forms of embolic debris, including thrombus. The device can also be used with any.014" wire making it an incredibly versatile system that can be used in cases where the risk of distal embolization could be higher.

During the second half of fiscal '21, we plan to introduce full lines of peripheral support products, including angioplasty balloons, catheters and a full complement of radio access support devices, representing up to $1,800 of incremental revenue for every peripheral OAS sold. We know this strategy works. In the last six months of fiscal 2020, we sold over $500 of support products for every coronary OAS sold. And remember peripheral atherectomy represents 80% of our units sold. So leveraging our large domestic sales channel by selling a growing number of peripheral products is expected to accelerate revenue growth.

Of course, the timing of our product development and launch milestones does represent our best estimates at this time. Naturally COVID and other factors could result in changes to the timing of these events. Internationally, we are encouraged by a recent ruling in Japan now allows facilities without surgical backup to conduct coronary atherectomy procedures. This dramatically expands the number of potential facilities where we can train and educate from 400 to over 700. In Europe, we anticipate CE Mark for our coronary atherectomy device during the first half of fiscal '21. With most of our on-site training professionals grounded due to COVID, our near-term revenue expectations are modest. We look forward to updating you on our plans once approved. Also, we recently submitted our coronary and peripheral OAS for approval in Canada.

Overall, we continue to execute on our international expansion strategy. However, we do anticipate that the effects of the pandemic will reduce international revenues during the first half of fiscal '21. In clinical, we will resume patient enrollment in our ECLIPSE trial later in fiscal '21 -- '20 to '21 when the disruption caused by the pandemic for further subside. We will be monitoring the status and renewal of research activities and semi-urgent procedures across the country and we'll engage with our principal investigators to ensure that our data is not influenced by the pandemic. This will certainly push out the timing of the readouts on ECLIPSE, but with 1,364 enroll to date in this important study, we will remain patient and will make sure we can definitively answer the question of how best to treat severely calcified coronary lesions.

With the lower extremity revasculation code set under review starting in October, it's important to note that peripheral atherectomy as a category has both proven safety and outcomes with decreased adverse events, shorter length of stay, lower major amputation rates and lower mortality rates when compared to stents, PPA and surgical bypass. CSI have taken an important leadership role and generated unprecedented peripheral medical evidence that set CSI apart from all competitors. More than 4,800 real-world patients and over 7,000 lesions treated in clinical studies have proven that OAS is a safe, durable, life changing and life sustaining cost effective solution. These data include LIBERTY 360, the largest real-world study of endovascular device interventions. We will continue to leverage ongoing data from LIBERTY 360, the largest real-world study of endovascular device interventions to drive the use of peripheral OAS.

In the fall timeframe, you will see a LIBERTY OAS publication that will provide further evidence to support the economics for treating more complex patients as well as more complex lesions by severe calcium, below the knee lesions and CTOs with the OAS. It was so important data, reflecting that the addition of OAS to a procedure lowers costs at one and two years compared to the overall study and to other technologies. This positions OAS very well for payers focused on more term long-term -- longer term outcomes. Although the CPT Editorial Panel process, can be a complicated and opaque process, we will do our best to keep everyone apprised of updates. We continue to anticipate that the development of a new code set may require a work group, which could push the introduction of new codes into 2023 or later. In the meantime we believe several of the societies will advocate to protect atherectomy reimbursement and may seek differentiation based lesion length and case complexity which may favor our technology that is used to treat long severely calcified lesions above and below the knee.

That concludes my prepared remarks. I will now turn the call back to Scott for his closing comments.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Rhonda. Well, the information that we've shared with you today should illustrate that we are managing this crisis exceptionally well and we are poised to resume our previous growth trajectory when this pandemic subsides. Although, the pandemic has changed many aspects of how we do business, it has not changed our strategic intent to become an innovative global medical device company focused on treating the most complex patients living with peripheral and coronary artery disease. We continued to invest in sustaining our market leadership and achieving attractive consistent growth in our core business, driving incremental growth by expanding our product portfolio, delivering higher revenue per procedure and accelerating the growth of our core business through a steady cadence of actual launches globally.

Despite the coronavirus, we are making strong progress on these objectives and we are well positioned to emerge from this crisis as a stronger and broader company. For example, over the past two years, we have launched 12 new products. We have expanded our evidence base significantly with greater than 70 manuscript published in peer reviewed journals, our products have been highlighted in over 100 podium presentations delivered at major medical conferences and we have expanded internationally with a presence now in 13 countries, including Japan, where we have rapidly gain market share.

In addition, we completed an equity financing in June that generated an additional $135 million in capital. This additional financial strength assures that we have the resources required to endure through the coronavirus crisis and provides flexibility to be opportunistic in adding new products to our portfolio. Although, nothing is imminent, we may consider adding products that will enhance the quality of care for our patients, leverage our commercial footprint and expand our core technologies.

In closing, I want to assure you that the strength, capacity and key growth drivers for our business remain vibrant and robust. We look forward to the day when we can focus solely on our mission to address that other pandemic called cardiovascular disease, which still today remains the number one cause of mortality in the United States. I would like to thank all of our CSI employees for their perseverance, dedication and compassion and delivering exceptional support to our customers and patients during this extraordinary time. I would also like to thank all of you for your continued interest in CSI and we will now take your questions.

Christine, if you would please repeat the instructions that would be great. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Your first question comes from the line of Chris Pasquale from Guggenheim. Your line is open.

Chris Pasquale -- Guggenheim Securities -- Analyst

Thanks. I appreciate taking the questions. Scott, to start with, I'd be curious if you can shed any light on how June and July sales compared to a year ago? I'd love to get a better sense for the incremental improvement that assuming guidance relative to where things stand today?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. I can comment on June, Chris, and I think you have been issuing reports based upon an advisory committee that you have assembled and I think actually they have served you well. I think you've been estimating recovery in that 80% to 90% range versus prior year. And I would say in June that's -- that we had climbed to about that range.

Chris Pasquale -- Guggenheim Securities -- Analyst

Okay. So fair to say that the guidance for the first quarter assume that the pace of recovery slows, but you do continue to make sequential improvement month-by-month?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. I think that's fair. I think we actually see -- we don't really believe that it'll slow, but we think it'll flat now.

Chris Pasquale -- Guggenheim Securities -- Analyst

Okay. And then the decline in STEMI emissions was one of the most surprising aspects what we saw in the early days of the pandemic. It still seems like coronary is lagging a bit. How much has that particular STEMI dynamic changed or improved?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. So the STEMI dynamic has improved a bit. But I think the fundamental issue we still have is in the coronary referral channel. And I think I'd like Dr. Egeland, our Chief Medical Officer just to address that briefly. Ryan, do you want to talk about that?

Ryan D. Egeland -- Chief Medical Office

Sure, yeah. Thanks for the question, Chris. I think the issue is outside of the ACS patients there is a reduction, obviously, in the diagnostic resources as a result of the pandemic and that, of course, reduces the number of patients that ultimately are diagnosed with non-emergent disease. And then, I think the second thing that has become more apparent is that, these patients that are advanced in disease they have significant symptoms, its complex disease, but may not necessarily present with in urgent inciting incident that creates an emergent procedure. And so some of those patients may elect. Although, they're not managed effectively with medications, they may elect not to come in the course of the pandemic. And so that's another contributing effect. We expect both of those really to become less pronounced over time.

Chris Pasquale -- Guggenheim Securities -- Analyst

Thanks.

Operator

Your next question comes from the line of Kristen Stewart from Barclays. Your line is open.

Kristen Stewart -- Barclays -- Analyst

Hi. Thanks for taking the question. I just kind of go back to the reimbursement decisions are kind of open the codes here in October. The comments were helpful just in terms of this taking a long time. I was just wondering if you could maybe just share some of your thoughts on opening the number of codes and whether or do you feel like that could be more positive in terms of changing the number of codes from 16 to 32 if you feel like that opens the door to maybe reflecting more of the variation in the type of procedures that are being treated in peripheral and maybe that being a good thing for you guys as you treat more complex regions as well.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. Thanks, Kristen. I really appreciate that and welcome to you. Quite honestly, we are really pleased that the lower extremity codes are now on the agenda in October. We've been shadow boxing against an unknown opponent here for a while. So we look forward to gaining clarity. I should say in regards to your question when you've indicated the increased number of codes, we don't at this time have a lot of visibility to exactly what's planned. This is clearly a very complex area of medicine with a lot of different procedures and a lot of different products that are used in the care of these patients. So it's difficult to comment on that specifically. I would point out, however, that we have a really unique case mix at CSI and we have been focused on treating patients that generally have a much higher burden of disease. So we focus on treating patients that have longer lesions and we focus on treating patients that have severely calcified lesions. These are usually really complex cases. So these are difficult patients to treat. We have a high focus on patients that have below the knee lesions and of course many of our patients have critical limb ischemia and we're very heavily involved in limb salvage procedures. So we do think that based on this large number of codes that the AMA may stratify the code by lesion complexity and by length and if they do that, we think this will be an advantage for CSI. It's reducing reimbursement in my view for CLI and limb salvage and some of these other complex cases with real high disease burden. It just doesn't seem to make sense. So we're confident that any reduction that may along would be small and probably would not reduce utilization and would not affect our pricing. So this is where we're at right now. It's about as much as we can say based upon the information that's available. We'll certainly keep you updated as we know more. As many people have indicated, we have filed as an interested part and perhaps we'll learn more in a few weeks. But at this time, that's about as much as we can address this topic.

Kristen Stewart -- Barclays -- Analyst

Thanks very much.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thanks, Kris.

Operator

Your next question comes from the line of Mike Matson from Needham. Your line is open.

David Saxon -- Needham & Company -- Analyst

Hi, good afternoon. This is David Saxon on for Mike. Thanks for taking the questions. You called out OBLs has leading the recovery for average daily sales, I just wondering if you could put some numbers behind that. And as you see that shift to OBLs, just wondering what the longer term implications are for pricing and margins if that mix proves to be more durable?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. The -- our OBLs, I'm going to have Jeff address this question in a moment. But actually the OBLs have really led our recovery in peripheral. We've seen OBLs in certain places like Texas and Florida where perhaps the healthcare community, the hospitals have been more severely affected. We've seen the office-based labs continue straight through and not be shutdown. So in that context, the OBLs have continued to lead the rebound and certainly we've benefited from that. So, Jeff, do you want to address the positive factors there?

Jeffrey S. Points -- Chief Financial Officer

Yeah. Just a follow up on that. You mentioned U.S. peripheral business is down 36% year-over-year, but if you just break that out the -- in the OBL space, we actually saw decline in the low-30s and in the peripheral space, we saw in the upper 30s. So we would expect that trend to continue here as we go into Q1.

David Saxon -- Needham & Company -- Analyst

Okay, thank you. And then just on the IVL patents. I mean it sounds like this is final. So can you confirm that. And I mean it sounds like you're may be planning on developing your own device. So, any color there and that would be very helpful. Thank you.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. The PTAB decision is open for appeal. We don't know if it will be appealed at this time. I can also say that, at this time, we are not really commenting on the nature of our R&D pipeline as it relates to the IVL. So we will ask you to stay tuned on that.

David Saxon -- Needham & Company -- Analyst

Okay. Thank you.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you.

Jeffrey S. Points -- Chief Financial Officer

Thanks, David.

Operator

Your next question comes from the line of Danielle Antalffy from SVB Leerink. Your line is open.

Danielle Antalffy -- SVB Leerink -- Analyst

Hey, good afternoon, everyone. Thanks so much for taking the question. Just a high level question Scott if you would on the reimbursement aspect of this. I mean, there is a lot of debate around this, but at the end of the day, like how much do you think -- how much of a moneymaker from a volume perspective is this for the hospital and/or the OBL? And does it, in your view, how much does that really even impact the actual adoption of these devices? That's my first question. I have one follow-up.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Sure, Danielle. Thank you for that. Yeah, I think, actually the, when you consider atherectomy and the utilization of atherectomy in hospitals and OBLs, it is not a large contributor to the revenue. If you just simply look at the atherectomy as a portion of the overall spending in this code set, it's a smaller percentage of the total. There are sites of course who focused on limb salvage and who focused on CLI and I think in those hospitals and in those OBLs, you would find that the use of our device is a higher percentage of their overall revenue streams. But generally speaking, it is not a major contributor to the revenue streams for these hospitals or for many OBLs. So, hopefully that's helpful.

Danielle Antalffy -- SVB Leerink -- Analyst

Yeah. I know that is. And I guess another way to to sort of ask the question. I mean, if reimbursement were to come down would it be, so detract so much from revenue that it would inhibit use. I guess that's what I'm trying to get at here.

Scott R. Ward -- Chairman, President & Chief Executive Officer

No, as I said, I don't think that a reimbursement, first of all, I don't think the reimbursement for atherectomy is going to come down that much. And in particular, as it relates to our company, we're focused on these more complex longer lesions, where we believe the societies are advocating for actually increase payment, because managing those patients it just takes longer and is more complicated. So, we really don't think reimbursement is going to come down a much. It just doesn't make sense that you would reimbursement for the care of these more complex patients. In terms of our -- the utilization of our product, I think it would have to come down a lot to affect it, because our product, like I said, we treat a very unique set of patients and really we have a very unique product. We're the only company that sells the device for the treatment of these severe -- severely calcified and long lesions. So as a result, there just simply are many alternatives in the marketplace for the care of these patients, frankly there's none. And so as a result of that, we believe that we will continue to have a very strong place in the treatment continuum for the care of patients that have CLI.

Danielle Antalffy -- SVB Leerink -- Analyst

Got it. Thanks so much.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Thank you, Danielle.

Operator

Your next question comes from the line of Suraj Kalia from Oppenheimer. Your line is open.

Suraj Kalia -- Oppenheimer & Co. Inc. -- Analyst

Good afternoon, everyone. Scott, can you hear me all right?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yes, Suraj. I can. Thank you.

Suraj Kalia -- Oppenheimer & Co. Inc. -- Analyst

Perfect. Hope everyone is safe and healthy. So, Scott, forgive me was just jumping in between calls. One, I don't know if the question has been asked about inventory, but are you seeing any shift in inventory in the field, specifically related and this is more of a broader question, whether it's IVL, whether it's atherectomy, just given hospital financial situation, should we be concerned paying attention to that specific aspect at this stage?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Well, Suraj, yes. I think over -- beginning in March hospitals really began to conserve their cash and they have not replenished inventories. And I would say, as you look at our current revenue streams, it very much reflects our organic growth. And what you are -- you really seeing now is a revenue run rate that very much correlates to our case loads.

Suraj Kalia -- Oppenheimer & Co. Inc. -- Analyst

Got it. Scott, did you talk about ECLIPSE enrollment status?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yes. Rhonda did addressed that. Did you have a specific question related to ECLIPSE?

Suraj Kalia -- Oppenheimer & Co. Inc. -- Analyst

Just curious, the number last we had was around a 1,000 patients enrolled. I wasn't sure if you all gave an updated number or...

Rhonda J. Robb -- Chief Operating Officer

So we actually made the decision when COVID had to suspend enrollments. Our customers really wanted to focus their hospital resources on caring for COVID patients during the pandemic. And so we are working with our PIs to identify when would be best to restart ECLIPSE. So the enrollment rate has remained stable since our last update. And we'll look at the best timing to resume when hospitals and the physicians and investigators are comfortable doing so. But anticipated sometime in FY '21 likely just not in our Q1.

Scott R. Ward -- Chairman, President & Chief Executive Officer

And we currently are at about 1,364 patients. Are at about 1,364 patients.

Rhonda J. Robb -- Chief Operating Officer

Yeah.

Suraj Kalia -- Oppenheimer & Co. Inc. -- Analyst

And if I could squeeze one more in, Rhonda, maybe -- and I appreciate the element of secrecy and you don't want to give too much information right now, but between now and your FYM, later in FY '21 on the PLAB, are we going to see any glimpse on bench testing of preclinicals published or otherwise at a scientific presentations. And specifically, the reason I ask is, because as it's pretty well documented, existing commercial purposes devices for high-risk PCI, a pretty high hemolysis rate and now mortality. So people like us just to take a step back and see on a relative basis, how obviously there are translational issues, but we'd love to get some perspective before your first analysis, any color would be great.

Rhonda J. Robb -- Chief Operating Officer

Sure.

Suraj Kalia -- Oppenheimer & Co. Inc. -- Analyst

Thanks everyone.

Rhonda J. Robb -- Chief Operating Officer

And we currently don't have plans to release any of our venture engineering testing data. We are laser focused in continuing to work productively with the FDA on that EFS protocol and as I mentioned in my comments, we have alignment to that. So that's a really exciting step. And just kind of focused on that pathway moving forward. And as we get through EFS and then subsequently move into pivotal, that may be the time at which we would begin to push more information and put more information out there with regard to the performance of our device.

Operator

Your next question comes from the line of Brandon Vazquez from William Blair. Your line is open.

Brandon Vazquez -- William Blair & Company -- Analyst

Hi. Thanks for taking the question. First, just in terms of patient pipelines and diagnosis during the ongoing pandemic, have you guys noticed that patients are kind of coming back into your customer new accounts? And do you feel comfortable that kind of the pipeline of patients is coming back, so that there is not maybe some pockets of volatility as we move through the next few quarters?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Well, I think we'll certainly see pockets of volatility and some of that will be caused by just the rolling outbreaks of COVID-19 across the country. As you look, if we normalize that across the United States, in total, I would say that we are seeing a restoration of the patient pipelines in peripheral. Certainly, as we look at our below the knee, which mainly a critical limb ischemia patient population, we did not see much of an impact in our patient referral pipelines there. For our claudicant patient population mainly above the knee. We are beginning to see a restoration and a recovery in the referral channels in that segment. And as Dr. Egeland referred to it earlier, we continue to see a bit of a depleted or let's say disrupted referral channel in coronary. And we've said before, we expect that that will improve and probably continuously improve over the course of the remainder of this calendar year. But at this time, yes, we do continue to see some disruption in our Coronary segment as has been reported by others operating in that market as well.

Brandon Vazquez -- William Blair & Company -- Analyst

Got it. And then turning over to the balance sheet quickly. That it's -- you guys have always had a healthy strong balance sheet and the recent capital raise just may got a little bit stronger. Do you think that the recent capital raise can help you pull forward any of your commercial initiatives, put further investments in any of your pipeline products, maybe pull some of that forward or is this -- should we think about this more just additional capital to kind of weather the uncertainty going forward?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. I think actually, for us, this is additional capital that we will use to assure our financial security and to assure that we're positioned to weather the storm. We also think that this additional capital gives us additional flexibility to consider potentially dislocated assets that are in the market right now. And we are, as we've talked about before, we are considering potentially adding products to our portfolio that would bring new technologies to our company, improve the quality of care for our patients and might also add revenue per procedure. So that's our intent in this -- in using this additional financial flexibility that we have. I would also note that, last quarter we were successful as well in updating our debt financing and we now have access to about $50 million of debt. Although, we haven't drawn upon that and we don't have intention to.

Brandon Vazquez -- William Blair & Company -- Analyst

Thank you.

Operator

[Operator Instructions] Your next question comes from the line of Jayson Bedford from Raymond James. Your line is open.

Jayson Bedford -- Raymond James -- Analyst

Good afternoon and thanks for squeezing me in. Just I guess a few questions. Just on site of service, can you remind us how big the OBL businesses is as a percent of peripheral?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah, Jayson. It remains about 30% of our peripheral business.

Jayson Bedford -- Raymond James -- Analyst

Okay. And then you mentioned that OBLs will play increasingly important role going forward, can we assume the lesions treated in the setting are shorter and less complex lesions?

Scott R. Ward -- Chairman, President & Chief Executive Officer

Yeah. I think that's a reasonable assumption generally, Jayson. But I think for us, we focus mainly on our office-based labs who are treating more complex patients. So most of our sites really are more focused on the treatment -- they're, frankly they're limb salvage centers and they're more focused on the treatment of these more complex longer lesions. So that is and has continued to be we're focused in the OBL segment.

Jayson Bedford -- Raymond James -- Analyst

Okay. And so just Scott in terms of your expectation around the AML -- AMA panel, your expectations are going to be stratify the codes by lesion, length and complex, not so much by a setting?

Scott R. Ward -- Chairman, President & Chief Executive Officer

We think that's the case. Yes, that's correct. We don't have any information on this Jayson. We just understand that the interest right now, the interest of the medical societies appears to be focused on stratifying the care of these patients based upon the complexity and length of the lesions treated.

Jayson Bedford -- Raymond James -- Analyst

Okay, OK. Just a last couple, in terms of your ability to add new centers in the quarter, can we assume that you added fewer centers or was that pretty steady?

Scott R. Ward -- Chairman, President & Chief Executive Officer

No, we definitely added fewer centers. Jeff, do you want to address the number of centers?

Jeffrey S. Points -- Chief Financial Officer

Yeah, Jayson. That's exactly right. On the coronary side, we added 12, and on the peripheral side we added 25, the majority of which were OBL centers.

Jayson Bedford -- Raymond James -- Analyst

Okay. Okay, fair. And then just last from me. We kind of hint to that at, but with the cash balance, you guys are clearly well funded. I think you hinted a little bit intentionally from an M&A to help growth the business, can you just give us some parameters around the size and characteristics you looking for with M&A?

Scott R. Ward -- Chairman, President & Chief Executive Officer

No, we -- I'd rather not. I think the characteristics that we've described are generally as I indicated Jayson. It's just products that are currently fit within our current commercial footprint. Products that, obviously, were used for the care of the patients we currently see. And then finally, we'd be looking at adding a kind of wholesale new technologies to our portfolio.

Jayson Bedford -- Raymond James -- Analyst

Okay. Thank you.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Okay.

Operator

There are no further questions. I will turn the call back over to Scott Ward.

Scott R. Ward -- Chairman, President & Chief Executive Officer

Great. Well, thank you very much. And with that, we will end the call. I thank all of you for your interest in CSI and we'll give you another update next quarter. Thank you.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

John E. Nielsen -- Vice President, Investor Relations & Corporate Communications

Scott R. Ward -- Chairman, President & Chief Executive Officer

Jeffrey S. Points -- Chief Financial Officer

Rhonda J. Robb -- Chief Operating Officer

Ryan D. Egeland -- Chief Medical Office

Chris Pasquale -- Guggenheim Securities -- Analyst

Kristen Stewart -- Barclays -- Analyst

David Saxon -- Needham & Company -- Analyst

Danielle Antalffy -- SVB Leerink -- Analyst

Suraj Kalia -- Oppenheimer & Co. Inc. -- Analyst

Brandon Vazquez -- William Blair & Company -- Analyst

Jayson Bedford -- Raymond James -- Analyst

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