Shares of Cardiovascular Systems (NASDAQ:CSII) are down by 10.2% as of 1:00 p.m. EDT on Wednesday after the company announced the pricing of a public offering of common stock on Tuesday evening. Investors aren't thrilled about the prospect of the medical device company diluting existing shareholders.
Shares of Cardiovascular Systems were worth a little under $38.50 apiece at the close of market on Tuesday. However, the company announced a public offering of 3,676,471 shares of its common stock for $34 per share. Also, Cardiovascular Systems is giving underwriters the option to purchase an additional 551,470 shares within 30 days. The company is expecting to raise about $125 million from this round of fundraising, which Cardiovascular Systems expects to close on Jun. 12.
Cardiovascular Systems will use the proceeds from this public offering of common stock for "working capital and general corporate purposes," including international expansion, product development, working capital, and more.
Like many other medical device companies, Cardiovascular Systems has been hit hard amid the ongoing public health crisis. In the press release announcing its financial results for its latest reported quarter, Q3 2020, Cardiovascular Systems said: "Healthcare system response to COVID-19 pandemic delayed atherectomy procedures and negatively impacted third quarter results." During this quarter, Cardiovascular Systems reported revenue of $61.2 million, a 3.4% year over year decrease. Also, the healthcare company recorded a net loss per share of $0.08 after reporting net earnings per share of $0.02 during the prior-year quarter.
Despite its poor financial results during the third quarter, Cardiovascular Systems seemed to be in a strong financial position, as the company had "cash and marketable securities totaling $107.3 million and no outstanding long-term debt" as of March 31.
During Cardiovascular Systems' third-quarter earnings conference call, the company's CEO, Scott Ward, said:
With a solid balance sheet, access to capital, no long-term debt, and strong gross margins, we will persevere through this pandemic and resume our double-digit growth trajectory when COVID-19 subsides and the healthcare system recovers.
Given this factor, Cardiovascular Systems' decision to raise funds by way of a public offering of common stock may have come as a bit of a surprise to investors.