10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _____________________________________________________

 FORM 10-Q

 _____________________________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2019

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File No. 000-52082

 ____________________________________________________

CARDIOVASCULAR SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

 ____________________________________________________

Delaware	41-1698056
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

1225 Old Highway 8 Northwest

St. Paul, Minnesota 55112-6416

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (651) 259-1600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, One-tenth of One Cent ($0.001) Par Value Per Share	CSII	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  x

The number of shares outstanding of the registrant’s common stock as of January 31, 2020 was: Common Stock, $0.001 par value per share, 35,247,743 shares.

Cardiovascular Systems, Inc.

Table of Contents

	PAGE
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements (unaudited)	2
Consolidated Balance Sheets	2
Consolidated Statements of Operations	3
Consolidated Statements of Comprehensive Income	4
Consolidated Statements of Changes in Stockholders’ Equity	5
Consolidated Statements of Cash Flows	7
Notes to Consolidated Financial Statements	8
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	24
ITEM 4. Controls and Procedures	24
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings	26
ITEM 1A. Risk Factors	26
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	26
ITEM 3. Defaults Upon Senior Securities	26
ITEM 4. Mine Safety Disclosures	26
ITEM 5. Other Information	26
ITEM 6. Exhibits	26
Signatures	28

PART I. — FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Cardiovascular Systems, Inc.

Consolidated Balance Sheets

(Dollars in thousands, except per share and share amounts)

(Unaudited)

	December 31, 2019		June 30, 2019
ASSETS
Current assets
Cash and cash equivalents	$	65,467	$	74,237
Marketable securities	43,954		48,435
Accounts receivable, net	35,833		36,015
Inventories	21,472		18,058
Prepaid expenses and other current assets	2,961		3,330
Total current assets	169,687		180,075
Property and equipment, net	27,320		27,324
Intangible assets, net	20,571		5,105
Other assets	6,614		6,073
Total assets	$	224,192	$	218,577
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	16,560	$	11,194
Accrued expenses	35,074		29,387
Deferred revenue	1,656		1,764
Total current liabilities	53,290		42,345
Long-term liabilities
Financing obligation	20,903		20,972
Deferred revenue	5,740		6,541
Other liabilities	954		775
Total liabilities	80,887		70,633
Commitments and contingencies (see Note 10)
Common stock, $0.001 par value; authorized 100,000,000 common shares; issued and outstanding 35,251,833 at December 31, 2019 and 34,934,569 at June 30, 2019, respectively	34		34
Additional paid in capital	487,780		477,368
Accumulated other comprehensive income	93		78
Accumulated deficit	(344,602)		(329,536)
Total stockholders’ equity	143,305		147,944
Total liabilities and stockholders’ equity	$	224,192	$	218,577

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

Cardiovascular Systems, Inc.

Consolidated Statements of Operations

(Dollars in thousands, except per share and share amounts)

(Unaudited)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Net revenues	$	68,334	$	60,206	$	132,824	$	116,472
Cost of goods sold	13,718		11,477		26,390		22,052
Gross profit	54,616		48,729		106,434		94,420
Expenses:
Selling, general and administrative	46,867		41,107		93,619		82,349
Research and development	10,786		7,183		21,551		14,547
Amortization of intangible assets	337		55		571		108
Total expenses	57,990		48,345		115,741		97,004
(Loss) income from operations	(3,374)		384		(9,307)		(2,584)
Other (income) expense, net:
Interest expense	500		422		972		846
Interest income and other, net	(517)		(563)		(1,180)		(1,100)
Total other (income) expense, net	(17)		(141)		(208)		(254)
(Loss) income before income taxes	(3,357)		525		(9,099)		(2,330)
Provision for income taxes	44		33		82		66
Net (loss) income	$	(3,401)	$	492	$	(9,181)	$	(2,396)
Basic earnings per share	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)
Diluted earnings per share	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)
Basic weighted average shares outstanding	34,069,412		33,507,843		33,969,818		33,466,454
Diluted weighted average shares outstanding	34,069,412		34,120,639		33,969,818		33,466,454

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

Cardiovascular Systems, Inc.

Consolidated Statements of Comprehensive Income

(Dollars in thousands)

(Unaudited)

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Net (loss) income	$	(3,401)	$	492	$	(9,181)	$	(2,396)
Other comprehensive income:
Unrealized (loss) gain on available-for-sale debt securities	(9)		—		15		—
Comprehensive (loss) income	$	(3,410)	$	492	$	(9,166)	$	(2,396)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4

Cardiovascular Systems, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(Dollars in thousands, except per share amounts)

(Unaudited)

	Common Stock		Additional Paid  In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
Balances at June 30, 2019	$	34	$	477,368	$	78	$	(329,536)	$	147,944
Stock-based compensation related to restricted stock awards, net	—		3,804		—		—		3,804
Shares withheld for payroll taxes	—		—		—		(5,506)		(5,506)
Employee stock purchase plan activity	—		242		—		—		242
Unrealized gain on available-for-sale debt securities	—		—		24		—		24
Stock issued for acquisitions	—		1,346		—		—		1,346
Net loss	—		—		—		(5,780)		(5,780)
Balances at September 30, 2019	34		482,760		102		(340,822)		142,074
Stock-based compensation related to restricted stock awards, net	—		3,091		—		—		3,091
Shares withheld for payroll taxes	—		—		—		(379)		(379)
Employee stock purchase plan activity	—		1,929		—		—		1,929
Unrealized loss on available-for-sale debt securities	—		—		(9)		—		(9)
Net loss	—		—		—		(3,401)		(3,401)
Balances at December 31, 2019	$	34	$	487,780	$	93	$	(344,602)	$	143,305

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5

Cardiovascular Systems, Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(Dollars in thousands, except per share amounts)

(Unaudited)

	Common Stock		Additional Paid  In Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total
Balances at June 30, 2018	$	33	$	461,927	$	101	$	(327,591)	$	134,470
Impact from adoption of ASU 2016-01 (See Note 7)	—		—		(101)		101		—
Stock-based compensation related to restricted stock awards, net	—		3,132		—		—		3,132
Shares withheld for payroll taxes	—		—		—		(1,058)		(1,058)
Employee stock purchase plan activity	—		252		—		—		252
Exercise of stock options at $8.75 per share	—		71		—		—		71
Net loss	—		—		—		(2,888)		(2,888)
Balances at September 30, 2018	33		465,382		—		(331,436)		133,979
Stock-based compensation related to restricted stock awards, net	1		2,471		—		—		2,472
Shares withheld for payroll taxes	—		—		—		(319)		(319)
Employee stock purchase plan activity	—		1,849		—		—		1,849
Exercise of stock options at $8.75 per share	—		125		—		—		125
Net income	—		—		—		492		492
Balances at December 31, 2018	$	34	$	469,827	$	—	$	(331,263)	$	138,598

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6

Cardiovascular Systems, Inc.

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

	Six Months Ended
	December 31,
	2019		2018
Cash flows from operating activities
Net loss	$	(9,181)	$	(2,396)
Adjustments to reconcile net loss to net cash from operating activities
Depreciation of property and equipment	1,493		1,577
Amortization of intangible assets	571		108
Write-off of patent costs	771		300
Provision for doubtful accounts	450		100
Stock-based compensation	7,196		5,926
Accretion of discount on marketable securities	(142)		—
Changes in assets and liabilities
Accounts receivable	(268)		1,219
Inventories	(3,414)		(3,074)
Prepaid expenses and other assets	886		1,125
Accounts payable	5,409		1,479
Accrued expenses and other liabilities	(4,642)		(1,868)
Deferred revenue	(909)		(970)
Net cash (used in) provided by operating activities	(1,780)		3,526
Cash flows from investing activities
Purchases of property and equipment	(1,080)		(994)
Acquisitions	(5,741)		—
Purchases of marketable securities	(4,844)		—
Sales of marketable securities	85		97
Maturities of marketable securities	9,400		—
Costs incurred in connection with patents	(573)		(475)
Net cash used in investing activities	(2,753)		(1,372)
Cash flows from financing activities
Proceeds from employee stock purchase plan	1,687		1,551
Payments of employee taxes related to vested restricted stock	(5,885)		(1,377)
Exercise of stock options	—		196
Principal payments made on financing obligation	(39)		(12)
Net cash (used in) provided by financing activities	(4,237)		358
Net change in cash and cash equivalents	(8,770)		2,512
Cash and cash equivalents
Beginning of period	74,237		116,260
End of period	$	65,467	$	118,772

The accompanying notes are an integral part of these unaudited consolidated financial statements.

7

CARDIOVASCULAR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the Six Months Ended December 31, 2019 and 2018)

(Dollars in thousands, except per share and share amounts)

(Unaudited)

1. Basis of Presentation

Cardiovascular Systems, Inc. (the “Company”), based in St. Paul, Minnesota, is a medical device company focused on developing and commercializing innovative solutions for treating vascular and coronary disease. The Company’s Orbital Atherectomy Systems (“OAS”) treat calcified and fibrotic plaque in arterial vessels throughout the leg and heart in a few minutes of treatment time, and address many of the limitations associated with existing surgical, catheter and pharmacological treatment alternatives. 

The Company prepared the unaudited interim consolidated financial statements and related unaudited financial information in the footnotes in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. The year-end consolidated balance sheet was derived from the Company’s audited consolidated financial statements, but does not include all disclosures as required by GAAP. These interim consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair statement of the Company’s consolidated financial position, the results of its operations, its changes in stockholders’ equity, and its cash flows for the interim periods. These interim consolidated financial statements should be read in conjunction with the consolidated annual financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2019. The nature of the Company’s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. Selected Consolidated Financial Statement Information

Accounts Receivable, Net

Accounts receivable consists of the following:

	December 31,		June 30,
	2019		2019
Accounts receivable	$	36,837	$	36,628
Less: Allowance for doubtful accounts	(1,004)		(613)
Accounts receivable, net	$	35,833	$	36,015

Inventories

Inventories consist of the following:

	December 31,		June 30,
	2019		2019
Raw materials	$	7,713	$	5,547
Work in process	2,039		1,415
Finished goods	11,720		11,096
Inventories	$	21,472	$	18,058

8

Property and Equipment, Net

Property and equipment consists of the following:

	December 31,		June 30,
	2019		2019
Land	$	572	$	572
Building	22,420		22,420
Equipment	18,022		17,517
Furniture	2,981		2,975
Leasehold improvements	563		540
Construction in progress	2,283		1,328
	46,841		45,352
Less: Accumulated depreciation	(19,521)		(18,028)
Property and equipment, net	$	27,320	$	27,324

Accrued Expenses

Accrued expenses consist of the following:

	December 31,		June 30,
	2019		2019
Acquisition consideration	$	9,743	$	—
Commissions	6,920		6,829
Salaries and bonus	6,087		11,105
Accrued vacation	4,870		4,230
Accrued excise, sales and other taxes	2,954		3,349
Clinical studies	2,460		2,092
Other accrued expenses	2,040		1,782
Accrued expenses	$	35,074	$	29,387

3. Revenue

The following table disaggregates the Company’s net revenues by product category and geography for the following periods:

	Three Months Ended				Six Months Ended
	December 31,				December 31,
Product Category	2019		2018		2019		2018
Peripheral	$	47,580	$	44,236	$	93,109	$	85,468
Coronary	20,754		15,970		39,715		31,004
Total net revenues	$	68,334	$	60,206	$	132,824	$	116,472
Geography
United States	$	65,960	$	58,596	$	127,489	$	113,520
International	2,374		1,610		5,335		2,952
Total net revenues	$	68,334	$	60,206	$	132,824	$	116,472

Revenue of $909 was recognized in the six months ended December 31, 2019 that was deferred as of June 30, 2019. As of December 31, 2019 and June 30, 2019, the Company had a liability of $1,910 and $1,958, respectively, related to estimates of variable consideration which are recorded within accounts payable on the consolidated balance sheet.

9

4. Acquisition

On August 5, 2019, the Company acquired the WIRION Embolic Protection System and related assets from Gardia Medical Ltd. ("Gardia"), a wholly owned Israeli subsidiary of Allium Medical Solutions Ltd., for a total purchase price of $16,687. The device, which received CE Mark in June 2015 and FDA clearance in March 2018, is a distal embolic protection filter used to capture debris that can be associated with all types of peripheral vascular intervention procedures. The Company acquired the device to expand its portfolio of products for physicians that treat complex peripheral arterial disease.

Upon closing, the Company made an initial $5,600 cash payment net of transaction expenses, and issued Gardia 31,493 shares of common stock of the Company valued at $1,346. Following the successful completion of the manufacturing transfer of the WIRION system to the Company, the Company has agreed to pay Gardia an additional $10,000, half of which may be paid by the Company through an additional issuance of shares of common stock. The Company has accounted for this transaction as an asset acquisition resulting in developed technology of $15,624, and a trade name of $760, both recognized as a component of intangible assets, net within the Company's consolidated balance sheet. The remainder of the purchase price was recognized in property and equipment.

The purchase also includes a performance milestone payment to Gardia equal to $3,000 for each $10,000 in net revenues recognized by the Company from sales of the WIRION system for applications above-the-knee in excess of $30,000 during the 36 month period beginning on the earlier of the first commercial sale of the system by the Company or six months following successful manufacturing transfer. If payment of the performance milestone becomes probable, these additional costs will added to the carrying value of the acquired assets.

5. Intangible Assets

The Company’s finite-lived intangible assets are stated at cost less accumulated amortization and include developed technology and trade name assets acquired in the asset acquisition discussed in Note 4, as well as costs incurred to obtain patents. Developed technology and trade name assets are amortized over 15 years. Patent costs are amortized beginning at the time of patent approval over a useful life not exceeding 20 years.

The components of intangible assets, net are as follows:

	December 31, 2019						June 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Developed technology	$	15,624	$	(434)	$	15,190	$	—	$	—	$	—
Patents	5,705		(1,063)		4,642		6,093		(988)		5,105
Trade name	760		(21)		739		—		—		—
Total intangible assets, net	$	22,089	$	(1,518)	$	20,571	$	6,093	$	(988)	$	5,105

Amortization expense expected for the next five years and thereafter is as follows:

Remainder of fiscal 2020	$	671
Fiscal 2021	1,343
Fiscal 2022	1,341
Fiscal 2023	1,335
Fiscal 2024	1,331
Thereafter	14,550
	$	20,571

6. Debt

Revolving Credit Facility

In March 2017, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). The Loan Agreement provides for a senior, secured revolving credit facility (the “Revolver”) of $40,000 (the “Maximum Dollar Amount”).

10

Advances under the Revolver may be made from time to time up to the Maximum Dollar Amount, subject to certain borrowing limitations. The Revolver has a maturity date of March 31, 2020 and bears interest at a floating per annum rate equal to the Wall Street Journal prime rate, less 0.25%. Interest on borrowings is due monthly and the principal balance is due at maturity. Borrowings up to $10,000 are available on a non-formula basis. Borrowings above $10,000 are based on (i) 85% of eligible domestic accounts receivable, and (ii) the lesser of 50% of eligible inventory or $5,000, subject to adjustment as defined in the Loan Agreement. Upon the Revolver’s maturity, any outstanding principal balance, unpaid accrued interest, and all other obligations under the Revolver will be due and payable. The Company will incur a fee equal to 1% of the Maximum Dollar Amount upon termination of the Loan Agreement or the Revolver for any reason prior to the maturity date, unless refinanced with SVB.

The Company’s obligations under the Loan Agreement are secured by certain of the Company’s assets, including, among other things, accounts receivable, deposit accounts, inventory, equipment, general intangibles and records pertaining to the foregoing. The collateral does not include the Company’s intellectual property, but the Company has agreed not to encumber its intellectual property without the consent of SVB. The Loan Agreement contains customary covenants limiting the Company’s ability to, among other things, incur debt or liens, make certain investments and loans, enter into transactions with affiliates, undergo certain fundamental changes, dispose of assets, or change the nature of its business. In addition, the Loan Agreement contains financial covenants requiring the Company to maintain, at all times when any amounts are outstanding under the Revolver, either (i) minimum unrestricted cash at SVB and unused availability on the Revolver of at least $10,000 or (ii) minimum trailing three-month Adjusted EBITDA of $1,000. If the Company does not comply with the various covenants under the Loan Agreement, the interest rate on outstanding amounts will increase by 5% and SVB may, subject to various customary cure rights, decline to provide additional advances under the Revolver, require the immediate payment of all amounts outstanding under the Revolver, and foreclose on all collateral.

Under the Loan Agreement, the Company paid SVB a non-refundable commitment fee of $80, which will be amortized to interest expense over the term of the Loan Agreement. The Company is required to pay a fee equal to 0.35% per annum on the unused portion of the Revolver, payable quarterly in arrears. The Company is not obligated to draw any funds under the Revolver and has not done so under the Revolver since entering into the Loan Agreement. No amounts are outstanding as of December 31, 2019.

Financing Obligation

In March 2017, in connection with the sale of the Company’s headquarters facility in St. Paul, Minnesota (the “Facility”), the Company entered into a Lease Agreement to lease the Facility. The Lease Agreement has an initial term of 15 years, with four consecutive renewal options of 5 years each at the Company’s option, with a base annual rent in the first year of $1,638 and annual escalations of 3% thereafter. Rent during subsequent renewal terms will be at the then fair market rental rate. As the lease terms resulted in a capital lease classification, the Company accounted for the sale and leaseback of the Facility as a financing transaction where the assets remain on the Company’s balance sheet and a financing obligation was recorded for $20,944. As lease payments are made, they will be allocated between interest expense and a reduction of the financing obligation, resulting in a value of the financing obligation that is equivalent to the net book value of the assets at the end of the lease term. The effective interest rate is 7.89%. At the end of the lease (including any renewal option terms), the Company will remove the assets and financing obligation from its balance sheet.

Payments under the initial term of the Lease Agreement as of December 31, 2019 are as follows:

Remainder of fiscal 2020	$	882
Fiscal 2021	1,803
Fiscal 2022	1,857
Fiscal 2023	1,913
Fiscal 2024	1,970
Thereafter	17,405
	$	25,830

11

7. Marketable Securities & Fair Value Measurements

The Company’s marketable securities are classified on the consolidated balance sheet as follows:

	December 31,		June 30,
	2019		2019
Short-term available-for-sale debt securities	$	33,803	$	38,193
Long-term available-for-sale debt securities	9,812		9,832
Available-for-sale debt securities	43,615		48,025
Mutual funds	339		410
Total marketable securities	$	43,954	$	48,435

Available-for-sale debt securities are invested in the following financial instruments:

			As of December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	4,992	$	—	$	—	$	4,992
Corporate debt	28,912		84		—		28,996
Asset backed securities	9,618		9		—		9,627
Total available-for-sale debt securities	$	43,522	$	93	$	—	$	43,615

			As of June 30, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	14,277	$	—	$	—	$	14,277
Corporate debt	26,466		64		—		26,530
Asset backed securities	7,204		14		—		7,218
Total available-for-sale debt securities	$	47,947	$	78	$	—	$	48,025

The following table provides information by level for the Company’s marketable securities that were measured at fair value on a recurring basis:

			Fair Value Measurements as of December 31, 2019 Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3
Commercial paper	$	4,992	$	—	$	4,992	$	—
Corporate debt	28,996		—		28,996		—
Asset backed securities	9,627		—		9,627		—
Mutual funds	339		105		234		—
Total marketable securities	$	43,954	$	105	$	43,849	$	—

12

			Fair Value Measurements as of June 30, 2019 Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3
Commercial paper	$	14,277	$	—	$	14,277	$	—
Corporate debt	26,530		—		26,530		—
Asset backed securities	7,218		—		7,218		—
Mutual funds	410		121		289		—
Total marketable securities	$	48,435	$	121	$	48,314	$	—

The Company’s marketable securities classified within Level 1 are valued using real-time quotes for transactions in active exchange markets. Marketable securities within Level 2 are valued using readily available pricing sources. There were no transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy during the six months ended December 31, 2019. Any transfers between levels would be recognized on the date of the event or when a change in circumstances causes a transfer.

Effective July 1, 2018 the Company adopted the provisions of ASU 2016-01. Unrealized gains and losses of marketable securities in equity investments, denoted as mutual funds, previously recognized in other comprehensive income, will now be recognized in net income as a component of other income.

Non-Marketable Equity Investment

The Company holds an equity investment that does not have a readily determined fair value. The Company has elected to measure this investment at cost minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Impairment is reviewed each reporting period by performing a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. As of December 31, 2019 and June 30, 2019, the carrying value of the investment was $5,593. During the six months ended December 31, 2019, no impairment indicators were noted. The investment is recorded within other long term assets on the consolidated balance sheet.

8. Stock-Based Compensation

On November 15, 2017, the Company’s stockholders approved the 2017 Equity Incentive Plan (the “2017 Plan”) for the purpose of granting equity awards to employees, directors and consultants. The 2017 Plan replaced the 2014 Equity Incentive Plan (the “2014 Plan”), and no further equity awards may be granted under the 2014 Plan (the 2017 Plan and the 2014 Plan are collectively referred to as the “Plans”).

Equity awards classified as restricted stock and performance-based restricted stock are treated as issued shares when granted; however, these shares are not included in the computation of basic weighted average shares outstanding. When shares vest, unless the holder elects to pay the payroll tax liability in cash or through a sale of shares, the Company withholds the appropriate amount of shares to settle the payroll tax liability, on behalf of the individual receiving the shares, as an adjustment to accumulated deficit.

Restricted Stock

The value of each restricted stock award is equal to the fair market value of the Company’s common stock at the date of grant. Vesting of time-based restricted stock awards ranges from one year to three years. The estimated fair value of restricted stock awards, including the effect of estimated forfeitures, is recognized on a straight-line basis over the restricted stock’s vesting period.

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Restricted stock award activity for the six months ended December 31, 2019 is as follows:

	Number of Shares	Weighted Average  Fair Value
Outstanding at June 30, 2019	474,945	$	31.36
Granted	185,517	$	46.64
Forfeited	(12,489)	$	34.44
Vested	(182,504)	$	30.03
Outstanding at December 31, 2019	465,469	$	36.86

Performance-Based Restricted Stock

The Company also grants performance-based restricted stock awards to certain executives and other management. In August 2019, the Company granted an aggregate maximum of 207,891 shares that vest based on the Company’s total shareholder return relative to total shareholder return of the Company’s peer group (a market condition), as measured by the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2019 compared to the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2022. Vesting of these awards will be determined on the date that the Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2022 is filed.

To calculate the estimated fair value of these restricted stock awards with market conditions, the Company uses a Monte Carlo simulation, which uses the expected average stock prices to estimate the expected number of shares that will vest. The Monte Carlo simulation resulted in an aggregate fair value of approximately $6,330, which the Company will recognize as expense using the straight-line method over the period that the awards are expected to vest. Stock-based compensation expense related to an award with a market condition will be recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

Performance-based restricted stock awards granted in fiscal 2018 and 2019 that are outstanding vest based on the Company’s total shareholder return relative to total shareholder return of the Company’s peer group (a market condition), as measured by the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2017 and July 1, 2018, respectively, compared to the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2020 and July 1, 2021, respectively.

Performance-based restricted stock award activity for the six months ended December 31, 2019 is as follows:

	Number of Shares	Weighted Average  Fair Value
Outstanding at June 30, 2019	753,872	$	15.20
Granted	207,891	$	30.45
Forfeited	(25,256)	$	16.10
Vested	(275,193)	$	11.97
Outstanding at December 31, 2019	661,314	$	21.69

9. Leases

Effective July 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 842 - Leases using the modified retrospective transition approach and electing the package of practical expedients. This resulted in the recognition of right-of-use assets of $441 and total operating lease liabilities of $463. There was no cumulative-effect adjustment recorded to retained earnings upon adoption.

The Company leases its Texas manufacturing facilities under an operating lease agreement. During the six months ended December 31, 2019, the Company exercised its option to extend the term of this lease agreement by one year, so that it now expires in April 2021. The Company also leases office equipment under lease agreements that expire at various dates through April 2024.

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The Company also leases its Minnesota headquarters facility as discussed in Note 6. This transaction did not qualify for sale leaseback accounting upon adoption of ASC 842 and continues to be accounted for as a financing obligation.

Operating lease right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement dates. The Company considers fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company uses its incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments unless the lease provides an implicit interest rate.

Operating lease cost is classified within the consolidated statement of operations based on the nature of the leased asset. The Company's operating lease cost was $120 and $241 for the three and six months ended December 31, 2019, respectively. Cash paid for operating lease liabilities approximated operating lease cost for the six months ended December 31, 2019. There was $437 of operating lease right-of-use assets obtained in exchange for new lease liabilities during the six months ended December 31, 2019.

	December 31,
	2019
Right-of-use assets
Other assets	$	658
Operating lease liabilities
Accrued expenses	$	492
Other liabilities	175
Total operating lease liabilities	$	667

Future minimum lease payments under the agreements as of December 31, 2019 are as follows:

Remainder of fiscal 2020	$	255
Fiscal 2021	423
Fiscal 2022	11
Fiscal 2023	3
Fiscal 2024	2
Thereafter	—
Total lease payments	694
Less imputed interest	(27)
Total operating lease liabilities	$	667

As of December 31, 2019, the weighted average remaining lease term for operating leases was 1.4 years and the weighted average discount rate used to determine operating lease liabilities was 5.25%.

10. Commitment and Contingencies

In the ordinary conduct of business, the Company is subject to various lawsuits and claims covering a wide range of matters including, but not limited to, employment claims and commercial disputes. While the outcome of these matters is uncertain, the Company does not believe there are any significant matters as of December 31, 2019 that are probable or estimable, for which the outcome could have a material adverse impact on its consolidated balance sheets or statements of operations.

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11. Earnings Per Share

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted earnings per common share computations (in thousands except share and per share amounts):

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Numerator
Net (loss) income	$	(3,401)	$	492	$	(9,181)	$	(2,396)
Income allocated to participating securities	—		(3)		—		—
Net (loss) income available to common stockholders	$	(3,401)	$	489	$	(9,181)	$	(2,396)
Denominator
Weighted average common shares outstanding – basic	34,069,412		33,507,843		33,969,818		33,466,454
Effect of dilutive restricted stock units(1)	—		327,662		—		—
Effect of performance-based restricted stock awards(2)	—		285,134		—		—
Weighted average common shares outstanding – diluted	34,069,412		34,120,639		33,969,818		33,466,454
Earnings per common share – basic	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)
Earnings per common share – diluted	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)

(1)At December 31, 2019 and 2018, 365,818 and 354,176 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 for the three and six months ended December 31, 2019, and the six months ended December 31, 2018, because those shares are anti-dilutive.

(2)At December 31, 2019 and 2018, 661,314 and 740,097 performance-based restricted stock awards, respectively, were outstanding. The effect of the potential vesting of these awards has been excluded from the calculation of diluted loss per share for the three and six months ended December 31, 2019, and the six months ended December 31, 2018, because those shares are anti-dilutive.

Unvested time-based restricted stock awards that contain nonforfeitable rights to dividends are participating securities and included in the computation of earnings per share pursuant to the two-class method. Under this method, earnings attributable to the Company are allocated between common stockholders and the participating awards, as if the awards were a second class of stock. During periods of net income, the calculation of earnings per share excludes the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. In the event of a net loss, undistributed earnings are not allocated to participating securities and the denominator excludes the dilutive impact of these securities as they do not share in the losses of the Company. During the three months ended December 31, 2018, undistributed earnings allocated to participating securities were based on 191,331 time-based restricted stock awards. During the three and six months ended December 31, 2019, and the six months ended December 31, 2018 there were no undistributed earnings allocated to participating securities due to the net losses.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing under Item 1 of Part I of this Quarterly Report on Form 10-Q. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business and expected financial results, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” discussed in our Annual Report on Form 10-K for the year ended June 30, 2019 and subsequent Quarterly Reports on Form 10-Q, including in Item 1A of Part II of this Quarterly Report on Form 10-Q, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

OVERVIEW

We are a medical technology company leading the way in the effort to successfully treat patients living with peripheral and coronary artery diseases, including those with arterial calcium, the most difficult arterial disease to treat. We are committed to clinical rigor, constant innovation and a defining drive to set the industry standard to deliver safe and effective medical devices that improve lives of patients facing these difficult disease states.

We have observed some degree of seasonality in our business, as there tends to be a lower number of procedures that use our products during the three months ending September 30. Interventional procedure volume usually grows throughout the course of the fiscal year, with the three months ending June 30 usually representing the highest volume of cases and, therefore, the highest amount of revenue generated by us during the course of the fiscal year.

Peripheral

Our peripheral arterial disease (“PAD”) products are catheter-based platforms capable of treating a broad range of plaque types in leg arteries both above and below the knee, including calcified plaque, and address many of the limitations associated with other existing surgical, catheter and pharmacological treatment alternatives. The micro-invasive devices use small access sheaths that can provide procedural benefits, allow physicians to treat PAD patients in even the small and tortuous vessels located below the knee, and facilitate access through alternative sites in the ankle, foot and wrist, as well as in the groin.

The United States Food and Drug Administration (“FDA”) has granted us 510(k) clearances for our Peripheral OAS as a therapy in patients with PAD, as discussed in Item 1 of Part I of our Annual Report on Form 10-K for the year ended June 30, 2019. We refer to these products in this Quarterly Report on Form 10-Q as the “Peripheral OAS.” In addition to our Peripheral OAS, we also offer support products within the peripheral space. Peripheral sales in the United States during the six months ended December 31, 2019 represented 70% of revenue.

Coronary

Our coronary artery disease (“CAD”) product, the Diamondback 360 Coronary OAS (“Coronary OAS”), is a catheter-based platform designed to facilitate stent delivery in patients with CAD who are acceptable candidates for percutaneous transluminal coronary angioplasty or stenting due to de novo, severely calcified coronary artery lesions. The Coronary OAS design is similar to technology used in our Peripheral OAS, customized specifically for the coronary application. In addition to the Coronary OAS, we also offer support products within the coronary space as we expand treatment to a broader patient population with complex coronary artery disease.

In October 2013, we received premarket approval (“PMA”) from the FDA to market the Coronary OAS as a treatment for severely calcified coronary arteries and we commenced a commercial launch that same month. Coronary sales in the United States during the six months ended December 31, 2019 represented approximately 26% of revenue.

International

Sales of our approved products in Japan are made through our exclusive Japan distributor, Medikit Co., Ltd. ("Medikit"). Sales of our products in the rest of the world, which primarily includes certain countries in Southeast Asia, Europe and the Middle East, are made through our exclusive international distributor, OrbusNeich^®. International sales during the six months ended December 31, 2019 represented approximately 4% of revenue.

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CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our consolidated financial statements requires us to make estimates, assumptions and judgments that affect amounts reported in those statements. Our estimates, assumptions and judgments, including those related to revenue recognition, deferred revenue and stock-based compensation, are updated as appropriate at least quarterly. We use authoritative pronouncements, our technical accounting knowledge, cumulative business experience, judgment and other factors in the selection and application of our accounting policies. While we believe that the estimates, assumptions and judgments that we use in preparing our consolidated financial statements are appropriate, these estimates, assumptions and judgments are subject to factors and uncertainties regarding their outcome. Therefore, actual results may materially differ from these estimates.

Some of our significant accounting policies require us to make subjective or complex judgments or estimates. An accounting estimate is considered to be critical if it meets both of the following criteria: (1) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made, and (2) different estimates that reasonably could have been used, or changes in the estimate that are reasonably likely to occur from period to period, would have a material impact on the presentation of our financial condition, results of operations, or cash flows.

Our critical accounting policies are identified in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended June 30, 2019 under the heading “Critical Accounting Policies and Significant Judgments and Estimates.”

RESULTS OF OPERATIONS

The following table sets forth our results of operations expressed as dollar amounts (in thousands) and the changes between the specified periods expressed as percent increases or decreases:

	Three Months Ended December 31,						Six Months Ended December 31,
	2019		2018		Percent Change		2019		2018		Percent Change
Net revenues	$	68,334	$	60,206	13.5	%	$	132,824	$	116,472	14.0	%
Cost of goods sold	13,718		11,477		19.5		26,390		22,052		19.7
Gross profit	54,616		48,729		12.1		106,434		94,420		12.7
Expenses:
Selling, general and administrative	46,867		41,107		14.0		93,619		82,349		13.7
Research and development	10,786		7,183		50.2		21,551		14,547		48.1
Amortization of intangible assets	337		55		512.7		571		108		428.7
Total expenses	57,990		48,345		20.0		115,741		97,004		19.3
(Loss) income from operations	(3,374)		384		(978.6)		(9,307)		(2,584)		(260.2)
Other (income) expense, net	(17)		(141)		(87.9)		(208)		(254)		(18.1)
(Loss) income before income taxes	(3,357)		525		(739.4)		(9,099)		(2,330)		(290.5)
Provision for income taxes	44		33		33.3		82		66		24.2
Net (loss) income	(3,401)		492		(791.3)		$	(9,181)	$	(2,396)	(283.2)

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Comparison of Three Months Ended December 31, 2019 with Three Months Ended December 31, 2018

Net revenues. Net revenues increased by $8.1 million, or 13.5%, from $60.2 million for the three months ended December 31, 2018 to $68.3 million for the three months ended December 31, 2019. Peripheral revenues increased $3.3 million, or 7.6%, and coronary revenues increased $4.8 million, or 30.0%. Both peripheral and coronary revenue increases were primarily driven by higher unit volumes as a result of the growth of our customer base and expansion into new international markets, and new product offerings such as balloons, guidewires, and catheters. Revenue growth from unit volume increases was partially offset by lower average selling prices. International revenue was $2.4 million for the three months ended December 31, 2019, compared with international revenue of $1.6 million for the three months ended December 31, 2018, an increase of $800,000. We expect our revenue to increase as we continue to increase the number of physicians using the devices, increase the usage per physician, introduce new and improved products, generate additional clinical data, and expand into new geographies through our distribution agreements with Medikit and OrbusNeich, partially offset by potential decreases in average selling prices.

Cost of Goods Sold. Cost of goods sold increased to $13.7 million for the three months ended December 31, 2019 from $11.5 million for the three months ended December 31, 2018, a 19.5% increase. These amounts represent the cost of materials, labor and overhead for single-use catheters, guide wires, pumps, and other ancillary products. The increase in cost of goods sold was due to greater unit volumes as we added new accounts, expanded internationally and offered additional products. Gross margin decreased to 79.9% for the three months ended December 31, 2019 from 80.9% for the three months ended December 31, 2018, primarily due to increased sales of lower margin products, expansion into lower margin international markets through distributor relationships, and lower average selling prices. This decrease was partially offset by product cost reductions and manufacturing efficiencies. We expect that gross margin in the third quarter of fiscal 2020 will be similar to gross margin in the three months ended December 31, 2019. Quarterly margin fluctuations could occur based on production volumes, timing of new product introductions, sales mix, pricing changes, or other unanticipated circumstances.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased by $5.8 million, or 14.0%, from $41.1 million for the three months ended December 31, 2018 to $46.9 million for the three months ended December 31, 2019. The increase was primarily due to increased expenses related to additional clinical specialists within our sales organization, the expansion of our medical affairs initiatives and international expansion. Selling, general and administrative expenses for the three months ended December 31, 2019 and 2018 include $2.7 million and $2.4 million, respectively, for stock-based compensation. We expect our selling, general and administrative expenses for the third quarter of fiscal 2020 to be consistent with amounts incurred for the three months ended December 31, 2019.

Research and Development Expenses. Research and development expenses increased by $3.6 million, or 50.2%, from $7.2 million for the three months ended December 31, 2018 to $10.8 million for the three months ended December 31, 2019. Research and development expenses relate to specific projects to develop new products or expand into new markets, such as the development of new versions of the Peripheral and Coronary OAS, shaft designs and crown designs, and to PAD and CAD clinical trials. The increase was primarily due to increased personnel and project costs for the three months ended December 31, 2019 as we invested in expanding our product portfolio and additional costs associated with the ECLIPSE clinical study. Research and development expenses for the three months ended December 31, 2019 and 2018 include $393,000 and $307,000, respectively, for stock-based compensation. We expect research and development expenses in the third quarter of fiscal 2020 to be consistent with amounts incurred for the three months ended December 31, 2019 based on the timing of our investments in the expansion of our product portfolio and clinical studies. Fluctuations could occur based on the number of projects and studies, the progress of such projects and studies, the rate of study enrollment, and the timing of expenditures.

Comparison of Six Months Ended December 31, 2019 with Six Months Ended December 31, 2018

Net revenues. Net revenues increased by $16.3 million, or 14.0%, from $116.5 million for the six months ended December 31, 2018 to $132.8 million for the six months ended December 31, 2019. Peripheral revenues increased $7.6 million, or 8.9%, and coronary revenues increased $8.7 million, or 28.1%. Both peripheral and coronary revenue increases were primarily driven by higher unit volumes as a result of the growth of our customer base and expansion into new international markets, and new product offerings such as balloons guidewires and catheters, partially offset by lower average selling prices. International revenue was $5.3 million for the six months ended December 31, 2019, compared with $3.0 million for the six months ended December 31, 2018, an increase of $2.3 million.

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Cost of Goods Sold. Cost of goods sold increased to $26.4 million for the six months ended December 31, 2019 from $22.1 million for the six months ended December 31, 2018, a 19.7% increase. These amounts represent the cost of materials, labor and overhead for single-use catheters, guide wires, pumps, and other ancillary products. The increase in cost of goods sold was due to greater unit volumes as we added new accounts, expanded internationally and offered additional products. Gross margin decreased to 80.1% for the six months ended December 31, 2019 from 81.1% for the six months ended December 31, 2018, primarily due to increased sales of lower margin products, expansion into lower margin international markets through distributor relationships, and lower average selling prices. This decrease was partially offset by product cost reductions and manufacturing efficiencies.

Selling, General and Administrative Expenses. Our selling, general and administrative expenses increased by $11.3 million, or 13.7%, from $82.3 million for the six months ended December 31, 2018 to $93.6 million for the six months ended December 31, 2019. The increase was primarily due to increased expenses related to the expansion of our medical affairs initiatives, additional clinical specialists within our sales organization and international expansion. Selling, general and administrative expenses for the six months ended December 31, 2019 and 2018 include $5.8 million and $5.0 million, respectively, for stock-based compensation.

Research and Development Expenses. Research and development expenses increased by $7.0 million, or 48.1%, from $14.6 million for the six months ended December 31, 2018 to $21.6 million for the six months ended December 31, 2019. Research and development expenses relate to specific projects to develop new products or expand into new markets, such as the development of new versions of the Peripheral and Coronary OAS, shaft designs and crown designs, and to PAD and CAD clinical trials. The increase was primarily due to increased personnel costs as we invested in expanding our product portfolio and additional costs associated with the ECLIPSE clinical study. Research and development expenses for the six months ended December 31, 2019 and 2018 include $1.0 million and $728,000, respectively, for stock-based compensation.

LIQUIDITY AND CAPITAL RESOURCES

We had cash and cash equivalents of $65.5 million and $74.2 million at December 31, 2019 and June 30, 2019, respectively. As of December 31, 2019, we had an accumulated deficit of $344.6 million. We have historically funded our operating losses primarily from the issuance of common and preferred stock, convertible promissory notes, and debt.

A summary of our cash flow activities is as follows:

	Six Months Ended
	December 31,
	2019		2018
Net cash (used in) provided by operating activities	$	(1,780)	$	3,526
Net cash used in investing activities	(2,753)		(1,372)
Net cash (used in) provided by financing activities	(4,237)		358
Net change in cash and cash equivalents	$	(8,770)	$	2,512

Changes in Liquidity

Operating Activities

Net cash used in operating activities was $1.8 million for the six months ended December 31, 2019, primarily due to the net loss of $9.2 million, and increased use of cash as we build inventory and diversify our products, as well as for payouts of previously accrued bonuses and commissions. The amount of cash used was partially offset by collections on receivables, increased accounts payable due to timing of activity and payments, and non-cash expenditures for the six months ended December 31, 2019.

Net cash provided by operating activities was $3.5 million for the six months ended December 31, 2018, primarily due to positive cash flow when the net loss of $2.4 million is adjusted for non-cash expenditures such as stock-based compensation, depreciation and amortization. Contributing to positive cash flows from operations was the timing of collections on receivables and of cash payments on payables. These positive cash flows were partially offset by the increased use of cash as we build inventory and diversify our products, as well as for payouts of previously accrued bonuses and commissions.

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Investing Activities

Net cash used in investing activities was $2.8 million for the six months ended December 31, 2019, primarily due to the cash payment made for the WIRION acquisition, additional purchases of marketable securities, purchases of property and equipment and costs associated with capitalized patent activities. These uses of cash were partially offset by maturities of marketable securities.

Net cash used in investing activities was $1.4 million for the six months ended December 31, 2018, primarily due to purchases of property and equipment and costs associated with capitalized patent activities.

Financing Activities

Net cash used in financing activities was $4.2 million for the six months ended December 31, 2019, primarily due to the payment of payroll taxes on the employee vesting of stock awards, partially offset by proceeds from employee stock purchases.

Net cash provided by financing activities was $358,000 for the six months ended December 31, 2018, primarily due to proceeds from employee stock purchases and the exercise of stock options, partially offset by the payment of payroll taxes on the employee vesting of stock awards.

Our future liquidity and capital requirements will be influenced by numerous factors, including the extent and duration of future operating losses, the level and timing of future sales and expenditures, the results and scope of ongoing research and product development programs, working capital required to support our business operations, the receipt of and time required to obtain regulatory clearances and approvals, our sales and marketing programs, the continuing acceptance of our products in the marketplace, competing technologies, market and regulatory developments, ongoing facility requirements, potential strategic transactions (including the potential acquisition of, or investments in, businesses, technologies and products), international expansion, and the existence, defense and resolution of legal proceedings. As of December 31, 2019, we believe our current cash and cash equivalents will be sufficient to fund working capital requirements, capital expenditures and operations for the foreseeable future, including at least the next twelve months, as well as to fund expenses relating to compliance with our Corporate Integrity Agreement, payments under our lease agreements, payments under development agreements and anticipated costs relating to litigation. We intend to retain any future earnings to support operations and to finance the growth and development of our business. We do not anticipate paying any dividends in the foreseeable future.

Facility Sale and Lease

On December 29, 2016, we entered into a Purchase and Sale Agreement, as subsequently amended (collectively, the “Sale Agreement”), with Krishna Holdings, LLC (“Krishna”), providing for the sale to Krishna of our headquarters facility in St. Paul, Minnesota (the “Facility”) for a cash purchase price of $21.5 million. On March 30, 2017, the sale of the Facility under the Sale Agreement closed. We received proceeds of approximately $20.9 million ($21.5 million less $556,000 of transaction expenses). In connection with the closing of the facility sale, we entered into a Lease Agreement (the “Lease Agreement”) with 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. The Lease Agreement has an initial term of fifteen years, with four consecutive renewal options of five years each, with a base annual rent in the first year of $1.6 million and annual escalations of 3%. See Note 6 to our Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional discussion.

Revolving Credit Facility

On March 31, 2017, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). The Loan Agreement provides for a senior, secured revolving credit facility (the “Revolver”) of $40.0 million (the “Maximum Dollar Amount”).

Advances under the Revolver may be made from time to time up to the Maximum Dollar Amount, subject to certain borrowing limitations. The Revolver has a maturity date of March 31, 2020 and bears interest at a floating per annum rate equal to the Wall Street Journal prime rate, less 0.25%. Interest on borrowings is due monthly and the principal balance is due at maturity. Borrowings up to $10.0 million are available on a non-formula basis. Borrowings above $10.0 million are based on (i) 85% of eligible domestic accounts receivable, and (ii) the lesser of 50% of eligible inventory or $5.0 million, subject to adjustment as defined in the Loan Agreement. Upon the Revolver’s maturity, any outstanding principal balance, unpaid accrued interest, and all other obligations under the Revolver will be due and payable. We will incur a fee equal to 1% of the Maximum Dollar

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Amount upon termination of the Loan Agreement or the Revolver for any reason prior to the maturity date, unless refinanced with SVB.

Our obligations under the Loan Agreement are secured by certain of our assets, including, among other things, accounts receivable, deposit accounts, inventory, equipment, general intangibles and records pertaining to the foregoing. The collateral does not include our intellectual property, but we agreed not to encumber our intellectual property without the consent of SVB. The Loan Agreement contains customary covenants limiting our ability to, among other things, incur debt or liens, make certain investments and loans, enter into transactions with affiliates, undergo certain fundamental changes, dispose of assets, or change the nature of our business. In addition, the Loan Agreement contains financial covenants requiring us to maintain, at all times when any amounts are outstanding under the Revolver, either (i) minimum unrestricted cash at SVB and unused availability on the Revolver of at least $10.0 million or (ii) minimum trailing three-month Adjusted EBITDA (as defined in the Loan Agreement) of $1.0 million. If we do not comply with the various covenants under the Loan Agreement, the interest rate on outstanding amounts will increase by 5% and SVB may, subject to various customary cure rights, decline to provide additional advances under the Revolver, require the immediate payment of all amounts outstanding under the Revolver, and foreclose on all collateral.

Under the Loan Agreement, we paid SVB a non-refundable commitment fee of $80,000, which will be amortized to interest expense over the term of the Loan Agreement. We are required to pay a fee equal to 0.35% per annum on the unused portion of the Revolver, payable quarterly in arrears. We are not obligated to draw any funds under the Revolver and have not done so under the Revolver since entering into the Loan Agreement. No amounts are outstanding as of December 31, 2019 and we currently do not have plans to borrow under the Loan Agreement.

NON-GAAP FINANCIAL INFORMATION

To supplement our consolidated financial statements prepared in accordance with GAAP, our management uses a non-GAAP financial measure referred to as “Adjusted EBITDA.” The following table sets forth, for the periods indicated, a reconciliation of Adjusted EBITDA to the most comparable GAAP measure expressed as dollar amounts (in thousands):

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Net (loss) income	(3,401)		492		$	(9,181)	$	(2,396)
Less: Other (income) expense, net	(17)		(141)		(208)		(254)
Less: Provision for income taxes	44		33		82		66
(Loss) income from operations	(3,374)		384		(9,307)		(2,584)
Add: Stock-based compensation	3,290		2,770		7,196		5,926
Add: Depreciation and amortization	1,090		831		2,064		1,685
Adjusted EBITDA	$	1,006	$	3,985	$	(47)	$	5,027

Adjusted EBITDA decreased for the three and six months ended December 31, 2019 as compared to the three and six months ended December 31, 2018 primarily due to a greater loss from operations.

Use and Economic Substance of Non-GAAP Financial Measures Used and Usefulness of Such Non-GAAP Financial Measures to Investors

We use Adjusted EBITDA as a supplemental measure of performance and believe this measure facilitates operating performance comparisons from period to period and company to company by factoring out potential differences caused by depreciation and amortization expense and non-cash charges such as stock-based compensation. Our management uses Adjusted EBITDA to analyze the underlying trends in our business, assess the performance of our core operations, establish operational goals and forecasts that are used to allocate resources and evaluate our performance period over period and in relation to our competitors’ operating results. Additionally, our management is partially evaluated on the basis of Adjusted EBITDA when determining achievement of their incentive compensation performance targets. Management does not use Adjusted EBITDA as a liquidity measure or in the calculation of our financial covenants under the loan and security agreement with Silicon Valley Bank.

22

We believe that presenting Adjusted EBITDA provides investors greater transparency to the information used by our management for its financial and operational decision-making and allows investors to see our results “through the eyes” of management. We also believe that providing this information better enables our investors to understand our operating performance and evaluate the methodology used by our management to evaluate and measure such performance.

The following is an explanation of each of the items that management excludes from Adjusted EBITDA and the reasons for excluding each of these individual items:

•Stock-based compensation. Our management believes that excluding this item from Adjusted EBITDA 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 our company, and excluding this item 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 Adjusted EBITDA is useful to investors to understand our operational performance and ability to make additional investments in our company.

Material Limitations Associated with the Use of Non-GAAP Financial Measures and Manner in Which We Compensate for these Limitations

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Some of the limitations associated with our use of these non-GAAP financial measures are:

•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 Adjusted EBITDA does 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.

We compensate for these limitations by relying primarily upon our GAAP results and using non-GAAP financial measures only supplementally.

INFLATION

We do not believe that inflation had a material impact on our business and operating results during the periods presented.

OFF-BALANCE SHEET ARRANGEMENTS

Since inception, we have not engaged in any off-balance sheet activities as defined in Item 303(a)(4) of Regulation S-K.

RECENT ACCOUNTING PRONOUNCEMENTS

For a description of recent accounting pronouncements, see Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the year ended June 30, 2019.

PRIVATE SECURITIES LITIGATION REFORM ACT

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Such “forward-looking” information is included in this Quarterly Report on Form 10-Q and in other materials filed or to be filed by us with the SEC (as well as information included in oral statements or other written statements made or to be made by us). Forward-looking statements include all statements based on future expectations. This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, including, but not limited to, (i) our expectation of continued sales of our products internationally, including the specific products to be sold, the territories in which such products will be sold, and the timing of such sales; (ii) seasonality in our business; (iii) our expectation that our revenue will increase; (iv) our expectation

23

that we will incur selling, general and administrative expenses in the third quarter of fiscal 2020 consistent with the amounts incurred in the three months ended December 31, 2019; (v) our expectation that gross margin in the third quarter of fiscal 2020 will be similar to gross margin in the three months ended December 31, 2019; (vi) our expectation that we will incur research and development expenses in the third quarter of fiscal 2020 consistent with the amounts incurred in the three months ended December 31, 2019; (vii) our belief that our current cash and cash equivalents will be sufficient to fund working capital requirements, capital expenditures and operations for the foreseeable future, as well as to fund certain other anticipated expenses; (viii) our intention to retain any future earnings to support operations and to finance the growth and development of our business; (ix) our dividend expectations; (x) our plan not to borrow under our loan and security agreement; and (xi) the anticipated impact of adoption of recent accounting pronouncements on our financial statements.

In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on our management’s beliefs and assumptions, which in turn are based on their interpretation of currently available information.

These statements involve known and unknown risks, uncertainties and other factors that may cause our results or our industry’s actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. These factors include regulatory developments, clearances and approvals; approval of our products for distribution in foreign countries; approval of products for reimbursement and the level of reimbursement in the United States, Japan and other foreign countries; dependence on market growth; agreements with third parties to sell their products; the ability of OrbusNeich to successfully launch our products outside of the United States and Japan; our ability to maintain third-party supplier relationships and renew existing purchase agreements; our ability to maintain our relationships with Medikit and OrbusNeich; the experience of physicians regarding the effectiveness and reliability of the products we sell; the reluctance of physicians, hospitals and other organizations to accept new products; the potential for unanticipated delays in enrolling medical centers and patients for clinical trials; actual clinical trial and study results; the impact of competitive products and pricing; our ability to comply with the financial covenants in our loan and security agreement and to make payments under and comply with the lease agreement for our corporate headquarters; unanticipated developments affecting our estimates regarding expenses, future revenues and capital requirements; the difficulty of successfully managing operating costs; our ability to manage our sales force strategy; actual research and development efforts and needs, including the timing of product development programs; our ability to obtain and maintain intellectual property protection for product candidates; fluctuations in results and expenses based on new product introductions, sales mix, unanticipated warranty claims, and the timing of project expenditures; our ability to manage costs; our actual financial resources and our ability to obtain additional financing; investigations or litigation threatened or initiated against us; court rulings and future actions by the FDA and other regulatory bodies; international trade developments; the impact of federal corporate tax reform on our business, operations and financial statements; shutdowns of the U.S. federal government; unanticipated developments during the manufacturing transfer process for the WIRION system; and general economic conditions.

These and additional risks and uncertainties are described more fully in our Annual Report on Form 10-K for the year ended June 30, 2019 and subsequent Quarterly Reports on Form 10-Q, including in Item 1A of Part II of this Quarterly Report on Form 10-Q. Copies of filings made with the SEC are available through the SEC’s electronic data gathering analysis and retrieval system (EDGAR) at www.sec.gov.

You should read these risk factors and the other cautionary statements made in this Quarterly Report on Form 10-Q as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report on Form 10-Q. We cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. You should read this Quarterly Report on Form 10-Q completely. Other than as required by law, we undertake no obligation to update these forward-looking statements, even though our situation may change in the future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our Annual Report on Form 10-K for the year ended June 30, 2019.

24

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, referred to collectively herein as the Certifying Officers, are responsible for establishing and maintaining our disclosure controls and procedures. The Certifying Officers have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2019. Based on that review and evaluation, which included inquiries made to certain other of our employees, the Certifying Officers have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures, as designed and implemented, are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

25

PART II. — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, including the important information in the section entitled “Private Securities Litigation Reform Act,” you should carefully consider the “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2019 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this Quarterly Report on Form 10-Q and materially adversely affect our business, financial condition and/or future operating results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also might materially adversely affect our business, financial condition and/or operating results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Company Repurchases of Equity Securities

The following table presents information with respect to purchases made by us of our common stock during the second quarter of fiscal 2020:

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs
October 1 to October 31, 2019	—	—		N/A	N/A
November 1 to November 30, 2019(1)	8,623	43.94		N/A	N/A
December 1 to December 31, 2019	—	—		N/A	N/A
	8,623	$	43.94

⁽¹⁾ Comprised of shares withheld pursuant to the terms of restricted stock awards under our stock-based compensation plans to offset tax withholding obligations that occur upon vesting and release of shares. The value of the shares withheld is the closing price of our common stock on the date the relevant transaction occurs.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

26

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1*	Certification of Chairman, President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chairman, President and Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Financial statements from the Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 2019, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) the Notes to Financial Statements.
104*	Cover page interactive data file (formatted in Inline XBRL and contained in Exhibit 101).

_______________________

* Filed herewith.

** Furnished herewith.

27

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: February 6, 2020		CARDIOVASCULAR SYSTEMS, INC.
	By	/s/ Scott R. Ward
		Scott R. Ward
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)
	By	/s/ Jeffrey S. Points
		Jeffrey S. Points
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

28

EX-31.1

Exhibit 31.1

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott R. Ward, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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.

Dated: February 6, 2020  

/s/ Scott R. Ward

Scott R. Ward
Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Jeffrey S. Points, certify that:

1. I have reviewed this quarterly report on Form 10-Q 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.

Dated: February 6, 2020  

/s/ Jeffrey S. Points

Jeffrey S. Points
Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 (the “Report”) by Cardiovascular Systems, Inc. (“Registrant”), I, Scott R. Ward, the Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: February 6, 2020 

/s/ Scott R. Ward

Scott R. Ward
Chairman, President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Quarterly Report on Form 10-Q for the quarter ended December 31, 2019 (the “Report”) by Cardiovascular Systems, Inc. (“Registrant”), I, Jeffrey S. Points, the Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated: February 6, 2020

/s/ Jeffrey S. Points

Jeffrey S. Points
Chief Financial Officer

XML

Leases

6 Months Ended

Dec. 31, 2019

Leases [Abstract]

Lessee, Operating Leases

9. Leases

Effective July 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) Topic 842 - Leases using the modified retrospective transition approach and electing the package of practical expedients. This resulted in the recognition of right-of-use assets of $441 and total operating lease liabilities of $463. There was no cumulative-effect adjustment recorded to retained earnings upon adoption.

The Company leases its Texas manufacturing facilities under an operating lease agreement. During the six months ended December 31, 2019, the Company exercised its option to extend the term of this lease agreement by one year, so that it now expires in April 2021. The Company also leases office equipment under lease agreements that expire at various dates through April 2024.

The Company also leases its Minnesota headquarters facility as discussed in Note 6. This transaction did not qualify for sale leaseback accounting upon adoption of ASC 842 and continues to be accounted for as a financing obligation.

Operating lease right-of-use assets and liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement dates. The Company considers fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. The Company uses its incremental borrowing rate based on information available at the lease commencement date in determining the present value of lease payments unless the lease provides an implicit interest rate.

Operating lease cost is classified within the consolidated statement of operations based on the nature of the leased asset. The Company's operating lease cost was $120 and $241 for the three and six months ended December 31, 2019, respectively. Cash paid for operating lease liabilities approximated operating lease cost for the six months ended December 31, 2019. There was $437 of operating lease right-of-use assets obtained in exchange for new lease liabilities during the six months ended December 31, 2019.

	December 31,
	2019
Right-of-use assets
Other assets	$	658
Operating lease liabilities
Accrued expenses	$	492
Other liabilities	175
Total operating lease liabilities	$	667

Future minimum lease payments under the agreements as of December 31, 2019 are as follows:

Remainder of fiscal 2020	$	255
Fiscal 2021	423
Fiscal 2022	11
Fiscal 2023	3
Fiscal 2024	2
Thereafter	—
Total lease payments	694
Less imputed interest	(27)
Total operating lease liabilities	$	667

As of December 31, 2019, the weighted average remaining lease term for operating leases was 1.4 years and the weighted average discount rate used to determine operating lease liabilities was 5.25%.

XML

Intangible Assets

6 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

5. Intangible Assets

The Company’s finite-lived intangible assets are stated at cost less accumulated amortization and include developed technology and trade name assets acquired in the asset acquisition discussed in Note 4, as well as costs incurred to obtain patents. Developed technology and trade name assets are amortized over 15 years. Patent costs are amortized beginning at the time of patent approval over a useful life not exceeding 20 years.

The components of intangible assets, net are as follows:

	December 31, 2019						June 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Developed technology	$	15,624	$	(434)	$	15,190	$	—	$	—	$	—
Patents	5,705		(1,063)		4,642		6,093		(988)		5,105
Trade name	760		(21)		739		—		—		—
Total intangible assets, net	$	22,089	$	(1,518)	$	20,571	$	6,093	$	(988)	$	5,105

Amortization expense expected for the next five years and thereafter is as follows:

Remainder of fiscal 2020	$	671
Fiscal 2021	1,343
Fiscal 2022	1,341
Fiscal 2023	1,335
Fiscal 2024	1,331
Thereafter	14,550
	$	20,571

XML

Marketable Securities & Fair Value Measurements - Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	$ 43,954	$ 48,435
Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	4,992	14,277
Corporate Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	28,996	26,530
Asset-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	9,627	7,218
Equity Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	339	410
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	105	121
Level 1 | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	0	0
Level 1 | Corporate Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	0	0
Level 1 | Asset-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	0	0
Level 1 | Equity Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	105	121
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	43,849	48,314
Level 2 | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	4,992	14,277
Level 2 | Corporate Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	28,996	26,530
Level 2 | Asset-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	9,627	7,218
Level 2 | Equity Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	234	289
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	0	0
Level 3 | Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	0	0
Level 3 | Corporate Debt Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	0	0
Level 3 | Asset-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	0	0
Level 3 | Equity Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total marketable securities	$ 0	$ 0

XML

Revenue - Disaggregate (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Disaggregation of Revenue [Line Items]
Net revenues	$ 68,334	$ 60,206	$ 132,824	$ 116,472
United States
Disaggregation of Revenue [Line Items]
Net revenues	65,960	58,596	127,489	113,520
International
Disaggregation of Revenue [Line Items]
Net revenues	2,374	1,610	5,335	2,952
Peripheral
Disaggregation of Revenue [Line Items]
Net revenues	47,580	44,236	93,109	85,468
Coronary
Disaggregation of Revenue [Line Items]
Net revenues	$ 20,754	$ 15,970	$ 39,715	$ 31,004

XML

Intangible Assets - Amortization (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year	$ 671
Finite-Lived Intangible Assets, Amortization Expense, Year Two	1,343
Finite-Lived Intangible Assets, Amortization Expense, Year Three	1,341
Finite-Lived Intangible Assets, Amortization Expense, Year Four	1,335
Finite-Lived Intangible Assets, Amortization Expense, Year Five	1,331
Finite-Lived Intangible Assets, Amortization Expense, after Year Five	14,550
Finite-Lived Intangible Assets, Net, Total	$ 20,571	$ 5,105

XML

Stock-Based Compensation - Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Aug. 31, 2018	Dec. 31, 2019	Dec. 31, 2019	Nov. 15, 2017
Restricted Stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			1 year
Restricted Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period			3 years
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance-based awards number preceding trading days			90 days
Grant Date Fair Value of Restricted Stock Awards, Quarterly Market Conditions		$ 6,330
Performance Shares | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares based on thresholds measuring total shareholder return	207,891
Two Thousand Fourteen Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of equity awards available to grant under the 2014 and 2007 plans				0

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Leases, Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jul. 01, 2019
Lessee, Operating Lease, Liability, Payment, Due
Remainder of fiscal 2020	$ 255
Fiscal 2021	423
Fiscal 2022	11
Fiscal 2023	3
Fiscal 2024	2
Thereafter	0
Lessee, Operating Lease, Liability, Payments, Due, Total	694
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	(27)
Operating lease liability	$ 667	$ 463

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Cash flows from operating activities
Net loss	$ (9,181)	$ (2,396)
Adjustments to reconcile net loss to net cash from operating activities
Depreciation of property and equipment	1,493	1,577
Amortization of intangible assets	571	108
Write-off of patent costs	771	300
450000	450	100
Stock-based compensation	7,196	5,926
Accretion (Amortization) of Discounts and Premiums, Investments	142
Changes in assets and liabilities
Accounts receivable	(268)	1,219
Inventories	(3,414)	(3,074)
Prepaid expenses and other assets	886	1,125
Accounts payable	5,409	1,479
Accrued expenses and other liabilities	(4,642)	(1,868)
Deferred revenue	(909)	(970)
Net cash (used in) provided by operating activities	(1,780)	3,526
Cash flows from investing activities
Purchases of property and equipment	(1,080)	(994)
Payments To Acquire Intangible Assets Purchased	(5,741)
Payments to Acquire Debt Securities, Available-for-sale	(4,844)
Sales of marketable securities	85	97
Maturities of marketable securities	9,400
Costs incurred in connection with patents	(573)	(475)
Net cash used in investing activities	(2,753)	(1,372)
Cash flows from financing activities
Proceeds from employee stock purchase plan	1,687	1,551
Payments of employee taxes related to vested restricted stock	(5,885)	(1,377)
Exercise of stock options		196
Proceeds from (Payments for) Other Financing Activities	(39)	(12)
Net cash (used in) provided by financing activities	(4,237)	358
Net change in cash and cash equivalents	(8,770)	2,512
Cash and cash equivalents
Beginning of period	74,237	116,260
End of period	$ 65,467	$ 118,772

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Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Dec. 31, 2019	Jun. 30, 2019
Statement of Financial Position [Abstract]
Common stock, par value (in usd per share)	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	35,251,833	34,934,569
Common stock, shares outstanding	35,251,833	34,934,569

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Stock-Based Compensation (Tables)

6 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement, Disclosure [Abstract]

Restricted Stock Award Activity

	Number of Shares	Weighted Average  Fair Value
Outstanding at June 30, 2019	474,945	$	31.36
Granted	185,517	$	46.64
Forfeited	(12,489)	$	34.44
Vested	(182,504)	$	30.03
Outstanding at December 31, 2019	465,469	$	36.86

Performance Based RSA Activity

	Number of Shares	Weighted Average  Fair Value
Outstanding at June 30, 2019	753,872	$	15.20
Granted	207,891	$	30.45
Forfeited	(25,256)	$	16.10
Vested	(275,193)	$	11.97
Outstanding at December 31, 2019	661,314	$	21.69

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Revenue (Tables)

6 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

	Three Months Ended				Six Months Ended
	December 31,				December 31,
Product Category	2019		2018		2019		2018
Peripheral	$	47,580	$	44,236	$	93,109	$	85,468
Coronary	20,754		15,970		39,715		31,004
Total net revenues	$	68,334	$	60,206	$	132,824	$	116,472
Geography
United States	$	65,960	$	58,596	$	127,489	$	113,520
International	2,374		1,610		5,335		2,952
Total net revenues	$	68,334	$	60,206	$	132,824	$	116,472

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Selected Consolidated Financial Statement Information - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Inventories
Raw materials	$ 7,713	$ 5,547
Work in process	2,039	1,415
Finished goods	11,720	11,096
Inventories	$ 21,472	$ 18,058

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Marketable Securities & Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Transfers of assets between Level 1 and Level 2	$ 0
Equity Securities without Readily Determinable Fair Value, Amount	5,593	$ 5,593
Other-than-temporary impairments	$ 0

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Leases - Balance Sheet Information (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jul. 01, 2019
Leases [Abstract]
Other assets	$ 658	$ 441
Accrued expenses	492
Other liabilities	175
Total operating lease liabilities	$ 667	$ 463

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Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) Statement - USD ($) $ in Thousands	Total	Common Stock	Additional Paid  In Capital	Accumulated Other Comprehensive Income	Accumulated Deficit
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cumulative Effect of New Accounting Principle in Period of Adoption				$ (101)	$ 101
Beginning balance, value at Jun. 30, 2018	$ 134,470	$ 33	$ 461,927	101	(327,591)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Based Compensation Restricted Stock Awards Net	3,132		3,132
Shares withheld for payroll taxes	(1,058)				(1,058)
Stock Issued During Period, Value, Employee Stock Purchase Plan	252		252
Employee stock purchase plan activity	71		71
Net loss	(2,888)				(2,888)
Ending balance, value at Sep. 30, 2018	133,979	33	465,382		(331,436)
Beginning balance, value at Jun. 30, 2018	134,470	33	461,927	101	(327,591)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(2,396)
Ending balance, value at Dec. 31, 2018	138,598	34	469,827		(331,263)
Beginning balance, value at Sep. 30, 2018	133,979	33	465,382		(331,436)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Based Compensation Restricted Stock Awards Net	2,472	1	2,471
Shares withheld for payroll taxes	(319)				319
Stock Issued During Period, Value, Employee Stock Purchase Plan	1,849		1,849
Employee stock purchase plan activity	125		125
Net loss	492				492
Ending balance, value at Dec. 31, 2018	138,598	34	469,827		(331,263)
Beginning balance, value at Jun. 30, 2019	147,944
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Based Compensation Restricted Stock Awards Net	3,804		3,804
Shares withheld for payroll taxes	(5,506)				5,506
Stock Issued During Period, Value, Employee Stock Purchase Plan	242		242
Unrealized gain on available-for-sale debt securities	24			24
Stock issued for acquisitions	1,346		1,346
Net loss	(5,780)				(5,780)
Ending balance, value at Sep. 30, 2019	142,074	34	482,760	102	(340,822)
Beginning balance, value at Jun. 30, 2019	147,944
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Unrealized gain on available-for-sale debt securities	15
Net loss	(9,181)
Ending balance, value at Dec. 31, 2019	143,305	34	487,780	93	(344,602)
Beginning balance, value at Sep. 30, 2019	142,074	34	482,760	102	(340,822)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock Based Compensation Restricted Stock Awards Net	3,091		3,091
Shares withheld for payroll taxes	(379)				379
Stock Issued During Period, Value, Employee Stock Purchase Plan	1,929		1,929
Unrealized gain on available-for-sale debt securities	(9)			(9)
Net loss	(3,401)				(3,401)
Ending balance, value at Dec. 31, 2019	$ 143,305	$ 34	$ 487,780	$ 93	$ (344,602)

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Current assets
Cash and cash equivalents	$ 65,467	$ 74,237
Marketable Securities, Current	43,954	48,435
Accounts Receivable, after Allowance for Credit Loss, Current	35,833	36,015
Inventory, Net	21,472	18,058
Prepaid expenses and other current assets	2,961	3,330
Total current assets	169,687	180,075
Property and equipment, net	27,320	27,324
Intangible assets, net	20,571	5,105
Other assets	6,614	6,073
Total assets	224,192	218,577
Current liabilities
Accounts payable	16,560	11,194
Accrued expenses	35,074	29,387
Deferred revenue current	1,656	1,764
Total current liabilities	53,290	42,345
Long-term liabilities
Financing obligation	20,903	20,972
Deferred revenue noncurrent	5,740	6,541
Other liabilities	954	775
Total liabilities	80,887	70,633
Commitments and contingencies (see Note 10)
Common stock, $0.001 par value; authorized 100,000,000 common shares; issued and outstanding 35,251,833 at December 31, 2019 and 34,934,569 at June 30, 2019, respectively	34	34
Additional paid in capital	487,780	477,368
Accumulated other comprehensive income	93	78
Accumulated deficit	(344,602)	(329,536)
Total stockholders’ equity	143,305	147,944
Total liabilities and stockholders’ equity	$ 224,192	$ 218,577

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Selected Consolidated Financial Statement Information - Property and Equipment, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Property and Equipment
Land	$ 572	$ 572
Building	22,420	22,420
Equipment	18,022	17,517
Furniture	2,981	2,975
Leasehold improvements	563	540
Construction in progress	2,283	1,328
Property and equipment, gross	46,841	45,352
Less: Accumulated depreciation	(19,521)	(18,028)
Property and equipment, net	$ 27,320	$ 27,324

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Leases (Tables)

6 Months Ended

Dec. 31, 2019

Leases [Abstract]

Lessee, Operating Lease, Liability, Maturity

	December 31,
	2019
Right-of-use assets
Other assets	$	658
Operating lease liabilities
Accrued expenses	$	492
Other liabilities	175
Total operating lease liabilities	$	667

Schedule of Future Minimum Lease Payments for Operating Leases

Remainder of fiscal 2020	$	255
Fiscal 2021	423
Fiscal 2022	11
Fiscal 2023	3
Fiscal 2024	2
Thereafter	—
Total lease payments	694
Less imputed interest	(27)
Total operating lease liabilities	$	667

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Intangible Assets (Tables)

6 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

	December 31, 2019						June 30, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Developed technology	$	15,624	$	(434)	$	15,190	$	—	$	—	$	—
Patents	5,705		(1,063)		4,642		6,093		(988)		5,105
Trade name	760		(21)		739		—		—		—
Total intangible assets, net	$	22,089	$	(1,518)	$	20,571	$	6,093	$	(988)	$	5,105

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense

Remainder of fiscal 2020	$	671
Fiscal 2021	1,343
Fiscal 2022	1,341
Fiscal 2023	1,335
Fiscal 2024	1,331
Thereafter	14,550
	$	20,571

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Commitment and Contingencies

6 Months Ended

Dec. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

10. Commitment and Contingencies

In the ordinary conduct of business, the Company is subject to various lawsuits and claims covering a wide range of matters including, but not limited to, employment claims and commercial disputes. While the outcome of these matters is uncertain, the Company does not believe there are any significant matters as of December 31, 2019 that are probable or estimable, for which the outcome could have a material adverse impact on its consolidated balance sheets or statements of operations.

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Debt

6 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Debt Disclosure

6. Debt

Revolving Credit Facility

In March 2017, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”). The Loan Agreement provides for a senior, secured revolving credit facility (the “Revolver”) of $40,000 (the “Maximum Dollar Amount”).

Advances under the Revolver may be made from time to time up to the Maximum Dollar Amount, subject to certain borrowing limitations. The Revolver has a maturity date of March 31, 2020 and bears interest at a floating per annum rate equal to the Wall Street Journal prime rate, less 0.25%. Interest on borrowings is due monthly and the principal balance is due at maturity. Borrowings up to $10,000 are available on a non-formula basis. Borrowings above $10,000 are based on (i) 85% of eligible domestic accounts receivable, and (ii) the lesser of 50% of eligible inventory or $5,000, subject to adjustment as defined in the Loan Agreement. Upon the Revolver’s maturity, any outstanding principal balance, unpaid accrued interest, and all other obligations under the Revolver will be due and payable. The Company will incur a fee equal to 1% of the Maximum Dollar Amount upon termination of the Loan Agreement or the Revolver for any reason prior to the maturity date, unless refinanced with SVB.

The Company’s obligations under the Loan Agreement are secured by certain of the Company’s assets, including, among other things, accounts receivable, deposit accounts, inventory, equipment, general intangibles and records pertaining to the foregoing. The collateral does not include the Company’s intellectual property, but the Company has agreed not to encumber its intellectual property without the consent of SVB. The Loan Agreement contains customary covenants limiting the Company’s ability to, among other things, incur debt or liens, make certain investments and loans, enter into transactions with affiliates, undergo certain fundamental changes, dispose of assets, or change the nature of its business. In addition, the Loan Agreement contains financial covenants requiring the Company to maintain, at all times when any amounts are outstanding under the Revolver, either (i) minimum unrestricted cash at SVB and unused availability on the Revolver of at least $10,000 or (ii) minimum trailing three-month Adjusted EBITDA of $1,000. If the Company does not comply with the various covenants under the Loan Agreement, the interest rate on outstanding amounts will increase by 5% and SVB may, subject to various customary cure rights, decline to provide additional advances under the Revolver, require the immediate payment of all amounts outstanding under the Revolver, and foreclose on all collateral.

Under the Loan Agreement, the Company paid SVB a non-refundable commitment fee of $80, which will be amortized to interest expense over the term of the Loan Agreement. The Company is required to pay a fee equal to 0.35% per annum on the unused portion of the Revolver, payable quarterly in arrears. The Company is not obligated to draw any funds under the Revolver and has not done so under the Revolver since entering into the Loan Agreement. No amounts are outstanding as of December 31, 2019.

Financing Obligation

In March 2017, in connection with the sale of the Company’s headquarters facility in St. Paul, Minnesota (the “Facility”), the Company entered into a Lease Agreement to lease the Facility. The Lease Agreement has an initial term of 15 years, with four consecutive renewal options of 5 years each at the Company’s option, with a base annual rent in the first year of $1,638 and annual escalations of 3% thereafter. Rent during subsequent renewal terms will be at the then fair market rental rate. As the lease terms resulted in a capital lease classification, the Company accounted for the sale and leaseback of the Facility as a financing transaction where the assets remain on the Company’s balance sheet and a financing obligation was recorded for $20,944. As lease payments are made, they will be allocated between interest expense and a reduction of the financing obligation, resulting in a value of the financing obligation that is equivalent to the net book value of the assets at the end of the lease term. The effective interest rate is 7.89%. At the end of the lease (including any renewal option terms), the Company will remove the assets and financing obligation from its balance sheet.

Payments under the initial term of the Lease Agreement as of December 31, 2019 are as follows:

Remainder of fiscal 2020	$	882
Fiscal 2021	1,803
Fiscal 2022	1,857
Fiscal 2023	1,913
Fiscal 2024	1,970
Thereafter	17,405
	$	25,830

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Selected Consolidated Financial Statement Information - Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Accrued Expenses
Acquisition consideration	$ 9,743	$ 0
Commissions	6,920	6,829
Salaries and bonus	6,087	11,105
Accrued vacation	4,870	4,230
Accrued excise, sales and other taxes	2,954	3,349
Clinical studies	2,460	2,092
Other accrued expenses	2,040	1,782
Accrued expenses	$ 35,074	$ 29,387

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Intangible Assets - Finite-Lived (Details) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 22,089	$ 6,093
Finite-Lived Intangible Assets, Accumulated Amortization	(1,518)	(988)
Finite-Lived Intangible Assets, Net, Total	$ 20,571	5,105
Developed Technology and Trade Names
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	15 years
Developed Technology Rights
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	$ 15,624	0
Finite-Lived Intangible Assets, Accumulated Amortization	(434)	0
Finite-Lived Intangible Assets, Net, Total	$ 15,190	0
Patents
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Asset, Useful Life	20 years
Finite-Lived Intangible Assets, Gross	$ 5,705	6,093
Finite-Lived Intangible Assets, Accumulated Amortization	(1,063)	(988)
Finite-Lived Intangible Assets, Net, Total	4,642	5,105
Trade Names
Finite-Lived Intangible Assets [Line Items]
Finite-Lived Intangible Assets, Gross	760	0
Finite-Lived Intangible Assets, Accumulated Amortization	(21)	0
Finite-Lived Intangible Assets, Net, Total	$ 739	$ 0

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Marketable Securities & Fair Value Measurements - Available-for-sale Measured at Fair Value (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Marketable Securities [Abstract]
Available-for-sale Securities, Current	$ 33,803	$ 38,193
Available-for-sale Securities, Noncurrent	9,812	9,832
Recurring
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale Equity Securities, Amortized Cost Basis	43,522	47,947
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	93	78
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Debt Securities, Available-for-sale	43,615	48,025
Marketable Securities [Abstract]
Total marketable securities	43,954	48,435
Recurring | Commercial Paper
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale Equity Securities, Amortized Cost Basis	4,992	14,277
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	0	0
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Debt Securities, Available-for-sale	4,992	14,277
Marketable Securities [Abstract]
Total marketable securities	4,992	14,277
Recurring | Corporate Debt Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale Equity Securities, Amortized Cost Basis	28,912	26,466
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	84	64
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Debt Securities, Available-for-sale	28,996	26,530
Marketable Securities [Abstract]
Total marketable securities	28,996	26,530
Recurring | Asset-backed Securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available-for-sale Equity Securities, Amortized Cost Basis	9,618	7,204
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	9	14
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Debt Securities, Available-for-sale	9,627	7,218
Marketable Securities [Abstract]
Total marketable securities	9,627	7,218
Recurring | Equity Funds
Marketable Securities [Abstract]
Total marketable securities	$ 339	$ 410

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Basis of Presentation

6 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

Cardiovascular Systems, Inc. (the “Company”), based in St. Paul, Minnesota, is a medical device company focused on developing and commercializing innovative solutions for treating vascular and coronary disease. The Company’s Orbital Atherectomy Systems (“OAS”) treat calcified and fibrotic plaque in arterial vessels throughout the leg and heart in a few minutes of treatment time, and address many of the limitations associated with existing surgical, catheter and pharmacological treatment alternatives. 

The Company prepared the unaudited interim consolidated financial statements and related unaudited financial information in the footnotes in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. The year-end consolidated balance sheet was derived from the Company’s audited consolidated financial statements, but does not include all disclosures as required by GAAP. These interim consolidated financial statements reflect all adjustments consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair statement of the Company’s consolidated financial position, the results of its operations, its changes in stockholders’ equity, and its cash flows for the interim periods. These interim consolidated financial statements should be read in conjunction with the consolidated annual financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2019. The nature of the Company’s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year.

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Income Statement [Abstract]
Net revenues	$ 68,334	$ 60,206	$ 132,824	$ 116,472
Cost of goods sold	13,718	11,477	26,390	22,052
Gross profit	54,616	48,729	106,434	94,420
Expenses:
Selling, general and administrative	46,867	41,107	93,619	82,349
Research and development	10,786	7,183	21,551	14,547
Amortization of intangible assets	337	55	571	108
Total expenses	57,990	48,345	115,741	97,004
(Loss) income from operations	(3,374)	384	(9,307)	(2,584)
Interest expense	500	422	972	846
Interest income and other, net	(517)	(563)	(1,180)	(1,100)
Total other (income) expense, net	(17)	(141)	(208)	(254)
(Loss) income before income taxes	(3,357)	525	(9,099)	(2,330)
Provision for income taxes	44	33	82	66
Net (loss) income	$ (3,401)	$ 492	$ (9,181)	$ (2,396)
Basic earnings per share
Basic earnings per share	$ (0.10)	$ 0.01	$ (0.27)	$ (0.07)
Diluted earnings per share	$ (0.10)	$ 0.01	$ (0.27)	$ (0.07)
Basic weighted average shares outstanding
Basic weighted average shares outstanding	34,069,412	33,507,843	33,969,818	33,466,454
Diluted weighted average shares outstanding	34,069,412	34,120,639	33,969,818	33,466,454

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Stock-Based Compensation - Restricted Stock Award Activity (Details)	6 Months Ended
	Dec. 31, 2019 $ / shares shares
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Awards outstanding, balance at beginning of period (in shares)	474,945
Awards granted (in shares)	185,517
Awards forfeited (in shares)	(12,489)
Awards vested (in shares)	(182,504)
Awards outstanding, balance at end of period (in shares)	465,469
Weighted Average Fair Value
Awards outstanding, balance at beginning of period (per share) | $ / shares	$ 31.36
Awards granted (per share) | $ / shares	46.64
Awards forfeited (per share) | $ / shares	34.44
Awards vested (per share) | $ / shares	30.03
Awards outstanding, balance at end of period (per share) | $ / shares	$ 36.86
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	182,504
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Awards outstanding, balance at beginning of period (in shares)	753,872
Awards granted (in shares)	207,891
Awards forfeited (in shares)	(25,256)
Awards vested (in shares)	(275,193)
Awards outstanding, balance at end of period (in shares)	661,314
Weighted Average Fair Value
Awards outstanding, balance at beginning of period (per share) | $ / shares	$ 15.20
Awards granted (per share) | $ / shares	30.45
Awards forfeited (per share) | $ / shares	16.10
Awards vested (per share) | $ / shares	11.97
Awards outstanding, balance at end of period (per share) | $ / shares	$ 21.69
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	275,193
Minimum | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Numerator
Net loss	$ (3,401)	$ (5,780)	$ 492	$ (2,888)	$ (9,181)	$ (2,396)
Income allocated to participating securities			(3)
Net (loss) income available to common stockholders	$ (3,401)		$ 489		$ (9,181)	$ (2,396)
Denominator
Basic and diluted weighted average shares outstanding	34,069,412		33,507,843		33,969,818	33,466,454
Weighted average common shares outstanding – diluted	34,069,412		34,120,639		33,969,818	33,466,454
Earnings per share, basic and diluted
Earnings per common share – basic	$ (0.10)		$ 0.01		$ (0.27)	$ (0.07)
Earnings per common share – diluted	$ (0.10)		$ 0.01		$ (0.27)	$ (0.07)
Common stock, shares outstanding	35,251,833				35,251,833		34,934,569
Restricted Stock Units (RSUs)
Denominator
Effect of dilutive share-based payment arrangements (in shares)			327,662
Earnings per share, basic and diluted
Common stock, shares outstanding	365,818		354,176		365,818	354,176
Performance Shares
Denominator
Effect of dilutive share-based payment arrangements (in shares)			285,134
Earnings per share, basic and diluted
Common stock, shares outstanding	661,314		740,097		661,314	740,097
Restricted Stock
Earnings per share, basic and diluted
Anti-dilutive shares (shares)						191,331

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Selected Consolidated Financial Statement Information - Accounts Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Jun. 30, 2019
Accounts Receivable
Accounts receivable	$ 36,837	$ 36,628
Less: Allowance for doubtful accounts	(1,004)	(613)
Accounts receivable, net	$ 35,833	$ 36,015

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Marketable Securities & Fair Value Measurements (Tables)

6 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Marketable Securities

	December 31,		June 30,
	2019		2019
Short-term available-for-sale debt securities	$	33,803	$	38,193
Long-term available-for-sale debt securities	9,812		9,832
Available-for-sale debt securities	43,615		48,025
Mutual funds	339		410
Total marketable securities	$	43,954	$	48,435

Schedule of Available-for-sale Securities Reconciliation

			As of December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	4,992	$	—	$	—	$	4,992
Corporate debt	28,912		84		—		28,996
Asset backed securities	9,618		9		—		9,627
Total available-for-sale debt securities	$	43,522	$	93	$	—	$	43,615

			As of June 30, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	14,277	$	—	$	—	$	14,277
Corporate debt	26,466		64		—		26,530
Asset backed securities	7,204		14		—		7,218
Total available-for-sale debt securities	$	47,947	$	78	$	—	$	48,025

Fair Value, Assets Measured on Recurring Basis

			Fair Value Measurements as of December 31, 2019 Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3
Commercial paper	$	4,992	$	—	$	4,992	$	—
Corporate debt	28,996		—		28,996		—
Asset backed securities	9,627		—		9,627		—
Mutual funds	339		105		234		—
Total marketable securities	$	43,954	$	105	$	43,849	$	—

			Fair Value Measurements as of June 30, 2019 Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3
Commercial paper	$	14,277	$	—	$	14,277	$	—
Corporate debt	26,530		—		26,530		—
Asset backed securities	7,218		—		7,218		—
Mutual funds	410		121		289		—
Total marketable securities	$	48,435	$	121	$	48,314	$	—

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Revenue - Narratives (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Jun. 30, 2019
Revenue from Contract with Customer [Abstract]
Revenue recognized previously deferred	$ 909
Volume-based rebates, discounts and incentives, current	$ 1,910	$ 1,958

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Debt - Revolving Credit Facility (Details) - Silicon Valley Bank - Revolving Credit Facility - USD ($) $ in Thousands	1 Months Ended
	Mar. 31, 2017	Jun. 30, 2017
Line of Credit Facility [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 40,000
Line of Credit Facility, Expiration Date	Mar. 31, 2020
Percent Reduction to Prime Interest Rate	0.25%
Borrowings Available On A NonFormula Basis		$ 10,000
Percentage of Eligible Accounts Receivable		85.00%
Percent of Eligible Inventory	50.00%
Maximum Eligible Inventory Value	$ 5,000
Early Termination Fee		1.00%
Covenant, Unused Availability	10,000
Covenant, Adjusted EBITDA	$ 1,000
Interest Rate Increase For Noncompliance	5.00%
Line of Credit Facility, Commitment Fee Amount	$ 80
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage	0.35%
Line of Credit Facility, Fair Value of Amount Outstanding		$ 0

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Stock-Based Compensation

6 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement, Disclosure [Abstract]

Stock Options and Restricted Stock Awards

8. Stock-Based Compensation

On November 15, 2017, the Company’s stockholders approved the 2017 Equity Incentive Plan (the “2017 Plan”) for the purpose of granting equity awards to employees, directors and consultants. The 2017 Plan replaced the 2014 Equity Incentive Plan (the “2014 Plan”), and no further equity awards may be granted under the 2014 Plan (the 2017 Plan and the 2014 Plan are collectively referred to as the “Plans”).

Equity awards classified as restricted stock and performance-based restricted stock are treated as issued shares when granted; however, these shares are not included in the computation of basic weighted average shares outstanding. When shares vest, unless the holder elects to pay the payroll tax liability in cash or through a sale of shares, the Company withholds the appropriate amount of shares to settle the payroll tax liability, on behalf of the individual receiving the shares, as an adjustment to accumulated deficit.

Restricted Stock

The value of each restricted stock award is equal to the fair market value of the Company’s common stock at the date of grant. Vesting of time-based restricted stock awards ranges from one year to three years. The estimated fair value of restricted stock awards, including the effect of estimated forfeitures, is recognized on a straight-line basis over the restricted stock’s vesting period.

Restricted stock award activity for the six months ended December 31, 2019 is as follows:

	Number of Shares	Weighted Average  Fair Value
Outstanding at June 30, 2019	474,945	$	31.36
Granted	185,517	$	46.64
Forfeited	(12,489)	$	34.44
Vested	(182,504)	$	30.03
Outstanding at December 31, 2019	465,469	$	36.86

Performance-Based Restricted Stock

The Company also grants performance-based restricted stock awards to certain executives and other management. In August 2019, the Company granted an aggregate maximum of 207,891 shares that vest based on the Company’s total shareholder return relative to total shareholder return of the Company’s peer group (a market condition), as measured by the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2019 compared to the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2022. Vesting of these awards will be determined on the date that the Company’s Annual Report on Form 10-K for the fiscal year ending June 30, 2022 is filed.

To calculate the estimated fair value of these restricted stock awards with market conditions, the Company uses a Monte Carlo simulation, which uses the expected average stock prices to estimate the expected number of shares that will vest. The Monte Carlo simulation resulted in an aggregate fair value of approximately $6,330, which the Company will recognize as expense using the straight-line method over the period that the awards are expected to vest. Stock-based compensation expense related to an award with a market condition will be recognized regardless of whether the market condition is satisfied, provided that the requisite service has been provided.

Performance-based restricted stock awards granted in fiscal 2018 and 2019 that are outstanding vest based on the Company’s total shareholder return relative to total shareholder return of the Company’s peer group (a market condition), as measured by the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2017 and July 1, 2018, respectively, compared to the closing prices of the stock of the Company and the peer group members for the 90 trading days preceding July 1, 2020 and July 1, 2021, respectively.

Performance-based restricted stock award activity for the six months ended December 31, 2019 is as follows:

	Number of Shares	Weighted Average  Fair Value
Outstanding at June 30, 2019	753,872	$	15.20
Granted	207,891	$	30.45
Forfeited	(25,256)	$	16.10
Vested	(275,193)	$	11.97
Outstanding at December 31, 2019	661,314	$	21.69

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Acquisition

6 Months Ended

Dec. 31, 2019

Business Combinations [Abstract]

Acquisition

4. Acquisition

On August 5, 2019, the Company acquired the WIRION Embolic Protection System and related assets from Gardia Medical Ltd. ("Gardia"), a wholly owned Israeli subsidiary of Allium Medical Solutions Ltd., for a total purchase price of $16,687. The device, which received CE Mark in June 2015 and FDA clearance in March 2018, is a distal embolic protection filter used to capture debris that can be associated with all types of peripheral vascular intervention procedures. The Company acquired the device to expand its portfolio of products for physicians that treat complex peripheral arterial disease.

Upon closing, the Company made an initial $5,600 cash payment net of transaction expenses, and issued Gardia 31,493 shares of common stock of the Company valued at $1,346. Following the successful completion of the manufacturing transfer of the WIRION system to the Company, the Company has agreed to pay Gardia an additional $10,000, half of which may be paid by the Company through an additional issuance of shares of common stock. The Company has accounted for this transaction as an asset acquisition resulting in developed technology of $15,624, and a trade name of $760, both recognized as a component of intangible assets, net within the Company's consolidated balance sheet. The remainder of the purchase price was recognized in property and equipment.

The purchase also includes a performance milestone payment to Gardia equal to $3,000 for each $10,000 in net revenues recognized by the Company from sales of the WIRION system for applications above-the-knee in excess of $30,000 during the 36 month period beginning on the earlier of the first commercial sale of the system by the Company or six months following successful manufacturing transfer. If payment of the performance milestone becomes probable, these additional costs will added to the carrying value of the acquired assets.

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Selected Consolidated Financial Statement Information (Tables)

6 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Schedule of Accounts Receivable

	December 31,		June 30,
	2019		2019
Accounts receivable	$	36,837	$	36,628
Less: Allowance for doubtful accounts	(1,004)		(613)
Accounts receivable, net	$	35,833	$	36,015

Schedule of Inventory

	December 31,		June 30,
	2019		2019
Raw materials	$	7,713	$	5,547
Work in process	2,039		1,415
Finished goods	11,720		11,096
Inventories	$	21,472	$	18,058

Schedule of Property and Equipment

	December 31,		June 30,
	2019		2019
Land	$	572	$	572
Building	22,420		22,420
Equipment	18,022		17,517
Furniture	2,981		2,975
Leasehold improvements	563		540
Construction in progress	2,283		1,328
	46,841		45,352
Less: Accumulated depreciation	(19,521)		(18,028)
Property and equipment, net	$	27,320	$	27,324

Schedule of Accrued Expenses

	December 31,		June 30,
	2019		2019
Acquisition consideration	$	9,743	$	—
Commissions	6,920		6,829
Salaries and bonus	6,087		11,105
Accrued vacation	4,870		4,230
Accrued excise, sales and other taxes	2,954		3,349
Clinical studies	2,460		2,092
Other accrued expenses	2,040		1,782
Accrued expenses	$	35,074	$	29,387

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Acquisition (Details) - USD ($) $ in Thousands		3 Months Ended	6 Months Ended
	Aug. 05, 2019	Sep. 30, 2019	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Consideration Transferred		$ 1,346
Payments to Acquire Intangible Assets			$ 573	$ 475
Finite-Lived Intangible Assets, Gross			22,089		$ 6,093
Developed Technology Rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finite-Lived Intangible Assets, Gross			15,624		0
Trade Names
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finite-Lived Intangible Assets, Gross			$ 760		$ 0
WIRION Embolic Protection System
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Business Combination, Consideration Transferred	$ 16,687
Payments to Acquire Intangible Assets	$ 5,600
Stock Issued During Period, Shares, New Issues	31,493
Other Significant Noncash Transaction, Value of Consideration Received	$ 1,346
Additional Consideration, Pending Disbursement	10,000
PotentialMilestonePayment	3
MilestonePaymentTargetIncrementinNetRevenues	10
MilestonePaymentTargetNetRevenuesExcessThreshold	30
WIRION Embolic Protection System | Developed Technology Rights
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finite-Lived Intangible Assets, Gross	15,624
WIRION Embolic Protection System | Trade Names
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Finite-Lived Intangible Assets, Gross	$ 760

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Debt - Financing Obligation (Details) - Capital Lease Obligations [Member] $ in Thousands	6 Months Ended
	Dec. 31, 2019 USD ($) lease_renewal_option
Debt Instrument [Line Items]
Lessee, Finance Lease, Term of Contract	15 years
Lessee Leasing Arrangements Capital Leases Number Options To Renew | lease_renewal_option	4
Lessee, Finance Lease, Renewal Term	5 years
Base Annual Rent Under Facility Lease	$ 1,638
Annual Rent Escalation	3.00%
Financing Obligation	$ 20,944
Effective Interest Rate	7.89%
Capital Leases, Future Minimum Payments, Remainder of Fiscal Year	$ 882
Fiscal 2021	1,803
Fiscal 2022	1,857
Fiscal 2023	1,913
Fiscal 2024	1,970
Thereafter	17,405
Capital Leases, Future Minimum Payments Due	$ 25,830

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Earnings Per Share

6 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Earnings Per Share

11. Earnings Per Share

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted earnings per common share computations (in thousands except share and per share amounts):

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Numerator
Net (loss) income	$	(3,401)	$	492	$	(9,181)	$	(2,396)
Income allocated to participating securities	—		(3)		—		—
Net (loss) income available to common stockholders	$	(3,401)	$	489	$	(9,181)	$	(2,396)
Denominator
Weighted average common shares outstanding – basic	34,069,412		33,507,843		33,969,818		33,466,454
Effect of dilutive restricted stock units(1)	—		327,662		—		—
Effect of performance-based restricted stock awards(2)	—		285,134		—		—
Weighted average common shares outstanding – diluted	34,069,412		34,120,639		33,969,818		33,466,454
Earnings per common share – basic	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)
Earnings per common share – diluted	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)

(1)At December 31, 2019 and 2018, 365,818 and 354,176 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 for the three and six months ended December 31, 2019, and the six months ended December 31, 2018, because those shares are anti-dilutive.

(2)At December 31, 2019 and 2018, 661,314 and 740,097 performance-based restricted stock awards, respectively, were outstanding. The effect of the potential vesting of these awards has been excluded from the calculation of diluted loss per share for the three and six months ended December 31, 2019, and the six months ended December 31, 2018, because those shares are anti-dilutive.

Unvested time-based restricted stock awards that contain nonforfeitable rights to dividends are participating securities and included in the computation of earnings per share pursuant to the two-class method. Under this method, earnings attributable to the Company are allocated between common stockholders and the participating awards, as if the awards were a second class of stock. During periods of net income, the calculation of earnings per share excludes the income attributable to participating securities in the numerator and the dilutive impact of these securities from the denominator. In the event of a net loss, undistributed earnings are not allocated to participating securities and the denominator excludes the dilutive impact of these securities as they do not share in the losses of the Company. During the three months ended December 31, 2018, undistributed earnings allocated to participating securities were based on 191,331 time-based restricted stock awards. During the three and six months ended December 31, 2019, and the six months ended December 31, 2018 there were no undistributed earnings allocated to participating securities due to the net losses.

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Marketable Securities & Fair Value Measurements

6 Months Ended

Dec. 31, 2019

Fair Value Disclosures [Abstract]

Investments

7. Marketable Securities & Fair Value Measurements

The Company’s marketable securities are classified on the consolidated balance sheet as follows:

	December 31,		June 30,
	2019		2019
Short-term available-for-sale debt securities	$	33,803	$	38,193
Long-term available-for-sale debt securities	9,812		9,832
Available-for-sale debt securities	43,615		48,025
Mutual funds	339		410
Total marketable securities	$	43,954	$	48,435

Available-for-sale debt securities are invested in the following financial instruments:

			As of December 31, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	4,992	$	—	$	—	$	4,992
Corporate debt	28,912		84		—		28,996
Asset backed securities	9,618		9		—		9,627
Total available-for-sale debt securities	$	43,522	$	93	$	—	$	43,615

			As of June 30, 2019
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Commercial paper	$	14,277	$	—	$	—	$	14,277
Corporate debt	26,466		64		—		26,530
Asset backed securities	7,204		14		—		7,218
Total available-for-sale debt securities	$	47,947	$	78	$	—	$	48,025

The following table provides information by level for the Company’s marketable securities that were measured at fair value on a recurring basis:

			Fair Value Measurements as of December 31, 2019 Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3
Commercial paper	$	4,992	$	—	$	4,992	$	—
Corporate debt	28,996		—		28,996		—
Asset backed securities	9,627		—		9,627		—
Mutual funds	339		105		234		—
Total marketable securities	$	43,954	$	105	$	43,849	$	—

			Fair Value Measurements as of June 30, 2019 Using Inputs Considered as
	Fair Value		Level 1		Level 2		Level 3
Commercial paper	$	14,277	$	—	$	14,277	$	—
Corporate debt	26,530		—		26,530		—
Asset backed securities	7,218		—		7,218		—
Mutual funds	410		121		289		—
Total marketable securities	$	48,435	$	121	$	48,314	$	—

The Company’s marketable securities classified within Level 1 are valued using real-time quotes for transactions in active exchange markets. Marketable securities within Level 2 are valued using readily available pricing sources. There were no transfers of assets between Level 1 and Level 2 of the fair value measurement hierarchy during the six months ended December 31, 2019. Any transfers between levels would be recognized on the date of the event or when a change in circumstances causes a transfer.

Effective July 1, 2018 the Company adopted the provisions of ASU 2016-01. Unrealized gains and losses of marketable securities in equity investments, denoted as mutual funds, previously recognized in other comprehensive income, will now be recognized in net income as a component of other income.

Non-Marketable Equity Investment

The Company holds an equity investment that does not have a readily determined fair value. The Company has elected to measure this investment at cost minus impairment, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Impairment is reviewed each reporting period by performing a qualitative assessment considering impairment indicators to evaluate whether the investment is impaired. As of December 31, 2019 and June 30, 2019, the carrying value of the investment was $5,593. During the six months ended December 31, 2019, no impairment indicators were noted. The investment is recorded within other long term assets on the consolidated balance sheet.

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Revenue

6 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue

3. Revenue

The following table disaggregates the Company’s net revenues by product category and geography for the following periods:

	Three Months Ended				Six Months Ended
	December 31,				December 31,
Product Category	2019		2018		2019		2018
Peripheral	$	47,580	$	44,236	$	93,109	$	85,468
Coronary	20,754		15,970		39,715		31,004
Total net revenues	$	68,334	$	60,206	$	132,824	$	116,472
Geography
United States	$	65,960	$	58,596	$	127,489	$	113,520
International	2,374		1,610		5,335		2,952
Total net revenues	$	68,334	$	60,206	$	132,824	$	116,472

Revenue of $909 was recognized in the six months ended December 31, 2019 that was deferred as of June 30, 2019. As of December 31, 2019 and June 30, 2019, the Company had a liability of $1,910 and $1,958, respectively, related to estimates of variable consideration which are recorded within accounts payable on the consolidated balance sheet.

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Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Statement of Comprehensive Income [Abstract]
Net loss	$ (3,401)	$ 492	$ (9,181)	$ (2,396)
Other comprehensive income:
Unrealized gain on available-for-sale debt securities	(9)		15
Comprehensive (loss) income	$ (3,410)	$ 492	$ (9,166)	$ (2,396)

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Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2019	Jan. 31, 2020
Cover page.
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity File Number	000-52082
Entity Registrant Name	CARDIOVASCULAR SYSTEMS, INC.
Entity Incorporation, State or Country Code	DE
Entity Central Index Key	0001180145
Current Fiscal Year End Date	--06-30
Entity Tax Identification Number	41-1698056
Entity Address, Address Line One	1225 Old Highway 8 Northwest
Entity Address, City or Town	St. Paul
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	55112-6416
City Area Code	651
Local Phone Number	259-1600
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock, One-tenth of One Cent ($0.001) Par Value Per Share
Trading Symbol	CSII
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		35,247,743

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Selected Consolidated Financial Statement Information

6 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Selected Consolidated Financial Statement Information

2. Selected Consolidated Financial Statement Information

Accounts Receivable, Net

Accounts receivable consists of the following:

	December 31,		June 30,
	2019		2019
Accounts receivable	$	36,837	$	36,628
Less: Allowance for doubtful accounts	(1,004)		(613)
Accounts receivable, net	$	35,833	$	36,015

Inventories

Inventories consist of the following:

	December 31,		June 30,
	2019		2019
Raw materials	$	7,713	$	5,547
Work in process	2,039		1,415
Finished goods	11,720		11,096
Inventories	$	21,472	$	18,058

Property and Equipment, Net

Property and equipment consists of the following:

	December 31,		June 30,
	2019		2019
Land	$	572	$	572
Building	22,420		22,420
Equipment	18,022		17,517
Furniture	2,981		2,975
Leasehold improvements	563		540
Construction in progress	2,283		1,328
	46,841		45,352
Less: Accumulated depreciation	(19,521)		(18,028)
Property and equipment, net	$	27,320	$	27,324

Accrued Expenses

Accrued expenses consist of the following:

	December 31,		June 30,
	2019		2019
Acquisition consideration	$	9,743	$	—
Commissions	6,920		6,829
Salaries and bonus	6,087		11,105
Accrued vacation	4,870		4,230
Accrued excise, sales and other taxes	2,954		3,349
Clinical studies	2,460		2,092
Other accrued expenses	2,040		1,782
Accrued expenses	$	35,074	$	29,387

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Leases - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2019	Jul. 01, 2019
Leases [Abstract]
Other assets	$ 658	$ 658	$ 441
Operating lease liability	667	667	$ 463
Cumulative effect adjustment recorded to retained earnings	0
Operating Lease, Cost	120	$ 241
Right-of-use asset obtained in exchange for operating lease liability	$ 437
Operating Lease, Weighted Average Remaining Lease Term	1 year 4 months 24 days	1 year 4 months 24 days
Operating Lease, Weighted Average Discount Rate, Percent	5.25%	5.25%

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Earnings Per Share (Tables)

6 Months Ended

Dec. 31, 2019

Earnings Per Share [Abstract]

Reconciliation of Numerators and Denominators Used in Basic and Diluted Earnings Per Common Share Computations

The following table presents a reconciliation of the numerators and denominators used in the basic and diluted earnings per common share computations (in thousands except share and per share amounts):

	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2019		2018		2019		2018
Numerator
Net (loss) income	$	(3,401)	$	492	$	(9,181)	$	(2,396)
Income allocated to participating securities	—		(3)		—		—
Net (loss) income available to common stockholders	$	(3,401)	$	489	$	(9,181)	$	(2,396)
Denominator
Weighted average common shares outstanding – basic	34,069,412		33,507,843		33,969,818		33,466,454
Effect of dilutive restricted stock units(1)	—		327,662		—		—
Effect of performance-based restricted stock awards(2)	—		285,134		—		—
Weighted average common shares outstanding – diluted	34,069,412		34,120,639		33,969,818		33,466,454
Earnings per common share – basic	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)
Earnings per common share – diluted	$	(0.10)	$	0.01	$	(0.27)	$	(0.07)

(1)At December 31, 2019 and 2018, 365,818 and 354,176 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 for the three and six months ended December 31, 2019, and the six months ended December 31, 2018, because those shares are anti-dilutive.

(2)At December 31, 2019 and 2018, 661,314 and 740,097 performance-based restricted stock awards, respectively, were outstanding. The effect of the potential vesting of these awards has been excluded from the calculation of diluted loss per share for the three and six months ended December 31, 2019, and the six months ended December 31, 2018, because those shares are anti-dilutive.

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Debt (Tables)

6 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Schedule of future minimum lease payments

Remainder of fiscal 2020	$	882
Fiscal 2021	1,803
Fiscal 2022	1,857
Fiscal 2023	1,913
Fiscal 2024	1,970
Thereafter	17,405
	$	25,830