Cardiovascular Systems Inc (CSII) 2018 Q1 法說會逐字稿

Good afternoon. My name is Kerstin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cardiovascular Systems, Inc. Fiscal Year 2018 First Quarter Earnings Conference Call. (Operator Instructions)

I would now like to turn the call over to your host, Mr. Jack Nielsen, Senior Director of Investor Relations. Please go ahead, sir.

Thank you, Kerstin. Good afternoon, and welcome to our fiscal 2018 first quarter conference call. With me on today's call are Scott Ward, CSI Chairman, President and CEO; and Larry Betterley, Chief Financial Officer.

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

We will also refer to non-GAAP measures because we believe they provide useful information for our investors. Today's news release contains a reconciliation table to GAAP results.

I'll now turn the call over to Scott Ward.

Thank you, Jack. Good afternoon, everyone, and thank you for joining us today. During today's call, we will discuss our first quarter performance and provide details on our commitment to drive future revenue growth.

First quarter revenues of $49.7 million were flat with the same period one year ago. Revenue was negatively affected by the hurricanes and the saline infusion pump recall. In addition, these temporary challenges caused turbulence in our business that disproportionately affected our coronary franchise.

We previously noted that the timing, severity and location of hurricanes Harvey and Irma would result in a temporary but substantial disruption to normal business activity in Florida and Houston and to a lesser extent in several other areas along the Gulf and Atlantic Coast. The affected markets represent nearly 20% of our business.

As many of you know, cath lab procedure volumes are low in July and August and then rebound in September. So our sales are typically back-end loaded in the first quarter. With only a few weeks remaining in the quarter, there was not sufficient time to recover the lost cath lab time and the canceled procedures that occurred during the period surrounding the hurricanes. In total, we lost over 300 selling days in Q1. Consequently, the timing of the hurricanes in late August and early September resulted in a significant impact on our quarterly revenues. Today, the sites of service in these affected areas are largely back up and running, and we anticipate a return to normal procedure volumes as the second quarter progresses.

As we stated during our fourth quarter conference call, the saline infusion pump recall continued to impact our sales in Q1. The recall temporarily disrupted our new account pipeline, caused a temporary slowdown in coronary case volumes and diverted valuable selling time as our sales reps were focused on inventory management and paperwork associated with the return of the affected pumps. I'm pleased to report that the recall is now closed and all field activities related to managing the recall are now complete.

Finally, our experience over the past 2 quarters has revealed that we are not gaining sufficient leverage from our dual franchise sales approach in certain circumstances. As a result, we are adjusting the allocation of sales resources to assure a dedicated focus on coronary accounts and increase coverage for both coronary and peripheral cases.

I will discuss these and other developments after Larry provides details on our Q1 results. Larry?

Thank you, Scott, and good afternoon, everyone. First quarter revenue of $49.7 million was consistent with last year. We sold approximately 15,250 devices during the quarter, generating 92% of revenues. Both peripheral and coronary revenues were flat with the prior year quarter at $38.2 million and $11.5 million, respectively. Below the knee product mix was also consistent at about 60% of peripheral revenue. Reorder revenues were 98% of total revenue. Gross profit margin was 81.5% in the quarter compared to 81% last year, driven by unit cost reductions.

Operating expenses of $42.4 million were also the same as last year. Operating expenses were lower than guidance, primarily due to lower incentive compensation as a result of lower financial performance.

First quarter net loss of $2 million or $0.06 per share was slightly better than the guidance range and consistent with last year. Adjusted EBITDA remained positive at $2.4 million. At quarter-end, our cash balance was strong at $105 million. Cash declined $3.2 million during the quarter, primarily from payments of incentive compensation earned and accrued in the prior fiscal year.

I'll now discuss our financial outlook. With the hurricanes and recall behind us, we expect revenues to increase significantly in our second fiscal quarter over the first quarter of this year and regain growth over prior periods. Full recovery, however, will take some time and is not expected to occur until the second half of the year.

For the second quarter of fiscal 2018, we anticipate revenues in a range of $52.5 million to $54 million, representing year-over-year growth of 5% to 8%; gross margin of about 81%; operating expenses of $44.5 million; other expense of about $225,000; and net loss in the range of $1.9 million to $2 million. This equates to a loss per share of $0.06 to $0.03 based on approximately 33.1 million average shares outstanding.

Also, adjusted EBITDA is expected to remain positive in the second quarter. For the full year, we still expect revenue in the range of $226 million to $233 million, which is consistent with our prior annual guidance.

I'll now turn the call back to Scott for additional commentary. Scott?

Thank you, Larry. Despite our slow start in Q1, we remain committed to our annual guidance. In August, I shared with you our plans to drive revenue growth in 2018 by increasing our sales productivity, enhancing our market development programs, introducing product line extensions in orbital atherectomy, launching our coronary franchise in Japan and continuing to set the standard for medical evidence to support the use of orbital atherectomy in the treatment of coronary and peripheral artery disease.

As you know, the majority of the CSI sales force supports both coronary and peripheral customers. We refer to this as our dual franchise sales model. And this approach has proven to be effective, principally because most of our customers performed both coronary and peripheral orbital atherectomy procedures. However, we have determined that full sustainable adoption of our coronary technology often requires more time and resources than our peripheral products.

Case coverage, clinical acumen and case -- and customer support important in our business, and it has been difficult for some of our dual franchise sales reps to balance the competing demands of their coronary and peripheral accounts. To assure a dedicated focus on coronary accounts and to accelerate the adoption of our technology, we have reallocated 20 sales representatives to focus exclusively on coronary in select high-volume markets. We are not adding new quota-carrying sales representatives. Our total number of quota-carrying representatives remains targeted at 200. In addition, we have expanded the number of field sales professionals by 45, primarily by adding clinical specialists to provide case coverage. This expansion improves our case coverage capacity by over 20% and will help support our sales representatives with both coronary and peripheral accounts.

In addition to providing increased case coverage in coronary, many of these clinical specialists will provide coverage in the rapidly growing office-based lab market. With over 700 locations today, office-based labs are forecasted to perform nearly 50% of peripheral atherectomy procedures by the year 2020. Consequently, we are dedicating more focused resources to this market segment, and we expect to capitalize this -- on this opportunity going forward.

CSI is the market leader in both peripheral and coronary atherectomy because we have the best interventional solution for the treatment of specific -- of calcific disease, and we have the strongest medical evidence in the market. We are focused on amputation prevention for patients with peripheral artery disease and specifically with critical limb ischemia.

In August, we added to our growing medical evidence with compelling 1 year data from our LIBERTY 360° study. As you recall, LIBERTY 360° is designed to evaluate the acute and long-term clinical and economic outcomes of peripheral vascular interventions in patients with peripheral artery disease. This is a large and clinically relevant trial with over 1,200 patients enrolled at 51 sites in the United States. Dr. Mustapha of Metro Health Hospital in Michigan presented the one year outcomes at the AMP conference. His presentation highlighted the impressive results achieved using orbital atherectomy in patients with critical limb ischemia, where amputation prevention should be the primary treatment goal. After one year of follow-up, over 91% of Rutherford Class 6 patients were free from amputation and major adverse events. These results illustrate that peripheral vascular intervention using orbital atherectomy can improve the quality of care and lead to amputation-free survival for critical limb ischemia patients.

Further, the LIBERTY 360° one year results support new AHA, ACC treatment guidelines recommending that an evaluation for revascularization options should be performed by an interdisciplinary team before amputation in patients with critical limb ischemia.

We are also gaining traction in our ECLIPSE coronary clinical trial. We began enrolling patients in this trial in March. Today, we have 35 sites activated and about 80 patients enrolled. We are planning to enroll approximately 100 sites and 2,000 patients in this trial, and we anticipate having the majority of these sites activated by the end of this fiscal year.

Flexing our sales model and expanding our medical evidence are both consistent, yet critical features of our long-term growth plan. However, the company we are building will also benefit from broader value streams that maintain our focus on the patients and customers that we already serve.

Our sales professionals are present in cases every day where our orbital atherectomy technology is used to treat complex coronary and peripheral lesions. Leveraging OEM and distribution agreements, we intend to add a line of support products that are typically used during our peripheral and coronary procedures, including wires, guide catheters and possibly balloon angioplasty catheters. 4 or 5 of these devices are typically used during our procedures, so this presents a meaningful opportunity to increase our revenue per procedure.

As a reminder, just a few years ago, we sold high-quality guide wires alongside our orbital atherectomy systems, and we were generating nearly $2 million of revenue per procedure -- per quarter, sorry, nearly $2 million of revenue per quarter when our distribution agreement for these wires expired in June of 2015. Accordingly, we believe the addition of these support products could have a favorable impact on our revenue per procedure over the course of the next 2 years.

We will also broaden our business by launching internally developed products and expanding to new geographies outside the United States. For example, we plan to commercialize our radial product for peripheral lesions in calendar 2018. In August, we announced FDA clearance for orbital atherectomy in the treatment of peripheral artery disease. As the only atherectomy device available to treat peripheral lesions using radial access, we believe this provides CSI with a very significant competitive advantage.

In addition, we plan to launch our coronary franchise in Japan in the second half of fiscal 2018. Japan is the second largest market for coronary interventions and an attractive market for our first commercial venture outside the U.S. We will provide more details regarding our opportunity in Japan after we receive reimbursement approval.

So in summary, we have taken action to address the revenue shortfall we experienced in Q1, and we have developed specific plans to accelerate our growth throughout the remainder of the year. Our intent is to build the company with broader value streams, while maintaining our focus on the patients and customers that we currently serve every day. Our greatest asset is our people, and we are well positioned to leverage the capabilities and capacity of this organization to introduce new products and improve the quality of care for patients with coronary and peripheral artery disease. We look to the future with confidence and a clear focus on our mission to save limbs and to save lives every day.

We certainly appreciate your continued support and interest in CSI. And we will now take your questions. Kerstin, please repeat the instructions, if you would. Thanks.

(Operator Instructions) And our first question comes from the line of Danielle Antalffy from Leerink Partners.

And congrats on pulling out a solid quarter and reiterating guidance despite the hurricane impact. Just a quick question on sales force sort of reorganization. Can you talk a little bit -- can you give a little bit more color, Scott, on what you think it will do for sales force productivity? And is there a ramp that needs to happen here that we should be thinking about as we're thinking about the model?

I think actually -- as you think about your model, I would just maintain the same assumptions building around that 200 quota-carrying sales representatives and delivering about the same productivity for now that we're seeing. I think what we're really doing by focusing on coronary is to really drive sustainable adoption in these key accounts. It gives us 20 sales representatives now that we can focus on these really large coronary accounts, where we can drive growth over time. The -- really the key thing here is to get back to a stable growth trajectory in coronary. I think what you see, Danielle, when our business experiences some form of turbulence, because our coronary case coverage, because coronary sales really requires case coverage, we oftentimes see that the turbulence in our business has a disproportionate effect on coronary. So by creating this more focused group of sales reps that will focus solely on coronary, we think that we can have a more stable growth trajectory and that we can sustain that business more effectively over time. We have been doing this for a little while. As I've said on a number of occasions, we have allowed our local management teams to focus their resources on accounts as they see fit locally. So they can allocate resources, where they think they can drive grow the best. So our sample size is small, but we have seen success, where we've targeted dedicated coronary sales reps. And as a result, I think over time, this will drive our growth and improve our productivity. But I don't think that we'll see any immediate impact that you should build into your models right now.

Okay, great. And then also as far as hurricane impact, I mean, it sounds like -- can you give any color on exactly what the impact was in the quarter? And what you're assuming from making the procedures in reiterated guidance? What I'm trying to get at is were it not for the hurricanes, would you guys actually be raising guidance today?

No, I think actually, if you look at the results and even considering my comments, I think that the shortfall that you saw was really about -- was probably about half -- the hurricane probably contributed to about half of that shortfall. The other half was really due to the lingering impacts of the recall and then the kind of the disproportionate effect that we saw on our coronary business. So I guess that probably addresses your question. The recall did continue to have an impact on us in Q1. And we forecasted that when we presented in August. But I think the area where we have room for improvement here is really to stabilize our coronary business and get that back on a predictable growth trajectory.

Okay. And did that contribute to the lower number of coronary new accounts added this quarter? Is that part of it too? Or are you talking more about existing accounts?

Well, I think it's really both. The lower coronary accounts were also impacted a bit by the disruption caused by the recall. But I think once again, anytime we get this disruption, it's easier for our sales representatives to go back to peripheral and do well there because selling coronary takes more time, it's more difficult and it requires more case coverage. So once again, it leads us back to really just the importance of this focused coronary sales organization.

Our next question comes from the line of John Gillings from JMP Securities.

So I want to start out also just asking a little bit about guidance. Maybe can you talk us through a little bit the forecasting process that you went through looking at the back half of the year and how you got comfortable that you could sort of make up for the first half and maintain guidance? I mean, it's great to see it maintained. I just want to know how you guys got to where you were comfortable doing that.

I think key to that John will be taking the new sales model that we have, the 285 total professionals, getting them back to the average productivity of the -- that we had basically in fiscal '17. So it's going to take a quarter to get them all up to speed, but that's going to be key to driving the numbers in the back half of the year.

Okay. That's helpful. And then I just wanted to dig a little bit deeper into the LIBERTY 360° data that you talked about and specifically the Rutherford 6 patients. I mean to have more than 91% free from amputation after a year, is pretty extraordinary. And so I guess what I'm wondering is now that we have that information out there and more people are becoming aware, did -- who has the patient before they would go to amputation? And do they know who -- how to get them to the right person? And are these interdisciplinary teams going to reliably look at these patients each time? Maybe just kind of walk us through that. And how quickly those patients could receive this kind of treatment?

Yes. So first of all, your -- that's a very astute question because that really is the key. There's 2 aspects to this. I mean, we now need to take this data and these results and get out to the physicians who are currently, who diagnose these patients. And that is oftentimes the primary care physicians, the podiatrist, the endocrinologist, physicians who are typically seeing patients with diabetes and other disorders that are typically found to be associated with peripheral artery disease. As we continue to educate that group of diagnosing physicians, we'll continue to improve their willingness to refer these patients for an angiographic examination prior to sending them on for an amputation. Now not all Rutherford 6 patients are created equal. I mean, there are some patients that have very severe lesions, where they may be very much at risk of developing an infection or sepsis. And as a result, an amputation still may be the most appropriate treatment for that patient. But what we find in these results is that for patients who have large wounds who are Rutherford 6, if we can treat them with orbital atherectomy and peripheral vascular intervention, we can indeed save them from an amputation and serious adverse events. And sustaining that type of an outcome for greater than 90% of the patients over 12 months is really a remarkable outcome. And our effort now is going to be focused on training and educating the referring physicians, these diagnosing physicians, but also working with the physicians that are currently performing these peripheral vascular interventions so that they know that when these patients do come into their practice, that performing an angiogram and treating them aggressively has been demonstrated to have good outcomes. So it's -- that is really -- that's really the focus. And it'll take us some time to continue to get this word out and to continue to provide this education, but we're very optimistic about these results and really pleased with the results of this trial.

Okay. And then just one last one from me, just kind of a big picture market development question. In some of my -- in some of my diligence I've spoken to physicians that use DCBs as well as orbital atherectomy and some of the feedback that I've had is that using a DCB in a severely calcified lesion is not only -- probably not going to be effective, but potentially fairly risky as the balloon will just kind of seek the path of least resistance and you end up not treating the calcium very well and putting too much pressure on the less diseased parts of the vessel. I just wanted to get kind of an update from you. Is this -- does that line up with what you guys are hearing and what you're seeing? And maybe just give us an updated view on how you see orbital atherectomy developing alongside the ongoing DCB market?

Yes. So good question. Drug-coated balloons are typically used or really only approved for use today in lesions that are above the knee. And I guess, where we see really severely calcified lesions there, the physicians that we interact with are generally using orbital atherectomy to prepare the vessel, to remove the calcium and to break up the medial calcium that's there to fracture that calcium, if you will. And by doing so that is thought to improve the distribution of the drug and may indeed enhance the effectiveness of a drug-coated balloon. I think the reference you make to safety probably the physicians in that case are probably referring to the use of a balloon in a severely calcified lesion and potentially causing a dissection of the vessel. That is a fairly rare complication, but it does occur. And certainly by treating the calcium there and preparing that vessel, you can not only improve drug distribution, but you can also dramatically reduce the incidence of dissections. So that generally is the case. I mean, what we're seeing out there pretty common now is the combined use of orbital atherectomy with drug-coated balloons. I think the companies that are selling drug-coated balloons are really doing a good job at driving patients to.. for intervention, driving them to the cath labs. And their market development programs frankly are a tailwind for us because the more of these patients that come into the cath labs, the more calcium that's there and the more we can treat. So we're encouraged by the fact that these technologies are typically used in combination with one another.

(Operator Instructions) Our next question comes from the line of Mike Matson from Needham & Company.

I guess, I'm just curious about how you're compensating these new reps that you've added? I understand they're not quota carrying. But is that going to add some cost? And what do you expect the impact on your margins to be from that?

Yes. So we are reallocating sales reps. So we are not adding new sales reps. We're adding -- we're reallocating 20 quota-carrying sales reps. So the dedicated coronary reps will be quota-carrying. And their compensation plan will be the same as our dual franchise reps, except that they will focus solely on coronary. So really, we don't anticipate any other -- any distinct financial implications.

The clinical specialists tend to -- the compensation of clinical specialists is roughly half, a little less than what a quota-carrying rep would be. So that does add some cost as built into our guidance for Q2.

Okay.

If you look into the back half the year, the quarterly OpEx is probably going to be $46 million plus for the third and fourth quarters.

Okay. All right. And then kind of intrigued by the comments around the support products. So one, is this going to be dilutive to your gross margins? Two, where are these going to come from? Are this going to be something that you partner, distribute from another company? Is it going to be something you develop internally? And then finally, what sort of the timing do you expect in terms of when you would start selling the guide wires and catheters and things like that?

So yes, the revenue that we generate from the sale of these products is likely to be dilutive to our gross margins. But I suppose it will depend on how successful we are in reducing our cost of goods sold for our products. As we -- the way we'll be bringing these products on is mainly through OEM agreements and distribution agreements. So we do anticipate adding wires and guide catheters to our product line during the course of this fiscal year, probably in -- later in the second half of this fiscal year. And we may be adding balloons as well during that time. The balloons are likely to come from a distribution agreement, while the wires and guide catheters are more likely to be from OEM supply agreements.

Okay. And then finally just on the ECLIPSE trial, I don't know you might have said this, I apologize, but just can you give us an update where enrollment stands? And is there going to be any presentation in terms of the trial design or anything like that at the upcoming TCT meeting?

Our current enrollment, we have enrolled about 60 -- we've enrolled about 35 sites at this time. And we have about 80 patients enrolled. So the enrollment is going well. I mean, what I'm watching very closely right now is just site activations because we're still within about 6 months of the start of the trial. We're going to put 100 sites on in total, and we anticipate having the 100 sites activated by really the end of this fiscal year. And that is kind of the leading indicator that really will drive patient enrollment. Remember too that the early patients enrolled in this study receive -- many of them will be enrolled into the OCT arm of the trial. And as a result, patient enrollment can be a bit slower at the start of the study because of the patient enrollment in that subgroup.

And our next question comes from the line of Jayson Bedford from Raymond James.

Just a few. I guess, there's obviously a lot of noise and disruption in the quarter. Scott, are you comfortable that there's been no change to the competitive landscape or your competitive positioning within accounts?

Yes. Good question. I am comfortable with that. I think that the noise that you're seeing there is really due to some unfortunate events and then the way that those have impacted our coronary franchise. At this time, we really do think that the competitive landscape is fairly stable. We don't see really new entrants or substantial changes occurring. The acquisition of Spectranetics by Philips closed in about the middle of this quarter. So we really didn't see much of an impact from that during that time frame, and we haven't seen much there. But there really isn't any significant change in competitive dynamics that I could reference for you.

Okay. That's fair. And just -- I apologize if this is known or understood. But just getting back to the size of the sales team, 200 quota-carrying reps plus 85 clinical specialists, is that the right way to think of the footprint of the team?

Yes. The model is 200 quota-carrying and 85 primarily clinical specialists. There's a few associates in there for bench strength, but primarily clinical specialists.

Some associate sales reps, but they are mainly clinical specialists, yes.

And just so I understand, how many have you added? I think there were -- release talked about adding 45. Are those people already have they been added or were they added recently?

Yes, they were added during Q1. So they are onboard now and basically in territory.

Okay. And just in terms of getting back to an earlier question, the implied acceleration in the second half of your fiscal year. It's largely due to bigger footprint, continued sales force productivity. There's no kind of pulling forward or adding more from Japan or radial or anything like that?

There is some. There's not much from radial, but there is certainly would be some from Japan. We do anticipate learning more about the reimbursement approval in Japan, probably in early calendar year 2018. And then we're still anticipating launching our product in Japan in the second half of this fiscal year. So there's some uplift there. It probably will be happening later in the fiscal year. So most of the growth that will be coming from our Japan launch, I think we'll see next fiscal year as that begins to ramp up.

Okay. And then maybe last from me, getting back to the LIBERTY 360° data. In terms of the impact, do you expect it to have more of an impact on adding new accounts? Or is this more of a driver of increased utilization at existing accounts?

I think it's really a driver of increased utilization. I think it -- that -- the LIBERTY 360° results combined with the guidelines, the new AHA, ACC guidelines, those 2 things combined provide a pretty compelling case for diagnosing physicians to be referring their patients on for an angiogram and for peripheral vascular intervention before they send them on for any other form of treatment or an amputation. These outcomes are very compelling. And really it's a call to action for these diagnosing physicians.

And our next question comes from the line of Bob Hopkins from Bank of America.

Just couple of quick things. One, just to clarify something. I think you said in this fiscal quarter, you did 15,250 procedures. Is that right? I just -- I have in the year ago period, you did 14,700, and that's obviously a lot more growth than flat. So I'm wondering what the discrepancy is.

Yes. The dollars were flat, Bob. You are correct. We did see about a 3% growth in the units year-over-year. So the offset for that is ASP.

Okay. And then -- sorry on this back half question. Is there any revenue in there from your new OEM agreements that you're talking about on the catheters and guide side? Is that part that will give the uplift? Because it just seems like the things you're talking about that will uplift in the back half were kind of known previously. So just it seems like, in order to get to the full year guidance, you've got to have even better growth in the back half than you originally anticipated and yet I'm not really sure what's new about the back half. So just curious as to why you didn't be a little more conservative maybe in the back half guide.

Well, it's early in the year. I mean, we're one quarter in, and we do have confidence in our sales organization and in our ability to grow. I think the changes we made in coronary and the additions we're driving into case coverage is new, Bob. I think you know the increase case coverage that we have out there will improve our productivity, in particular in our large coronary accounts and also in these office-based labs. So that's new. That's different. Yes, there is a small amount of revenue in the second half related to radial. There's a small amount related to these -- to our OEM strategy. And I would say there's a small amount related to Japan as well. So that's really where we anticipate the uplift to come from.

Okay. And then in the second quarter -- second fiscal quarter by my math you're anticipating growing about 6% or so. Is there residual impact from the storms? Or is that more a function of some of the stuff on the coronary side taking a little bit longer to sort of resolve and get headed in the right direction?

I think it's both of those. I mean, there still is a residual amount related to the storms. We're seeing a restoration of some of the office-based labs and some of the ambulatory sites in certain parts of the country. But right now, some of the others are really still focused on inpatient care and the normal cadence of referrals to some of these office-based labs really hasn't come back fully online yet in some places, but that's a relatively small impact. I would say more what we're seeing is it will take a short amount of time for us to ramp up our new focus in coronary here. And remember too that as we do that, in these 20 territories, let's say, where we now have focused coronary reps, we basically are enabling our peripheral reps to get back to focus on peripheral. So while they still will be dual franchise reps and they'll still cover some coronary accounts, they are going to have more time now to focus back on their core business. So adding these coronary reps has the synergistic benefit of providing greater capacity in peripheral as well.

And then I guess 2 other quick little things. Just on that topic so, I mean, you kind of -- you had this specific coronary sales force previously and then you've kind of gone back -- not necessarily back and forth but have made a couple of adjustments to the model. So just -- I guess just sort of theoretically, what's different now than the last time you had sort of the dedicated coronary group? And I just want to ask also on the number of CAD accounts. Is that a -- the number that you provide, is that a net number? I'm just curious if there are any accounts that dropped off?

Yes. So it's a little bit hard for me to comment on how this is different because it predates me, but what I think is really important today is the treatment of complex coronary lesions has really become kind of the unmet medical need of our time. And so there are many institutions now that are focusing on the treatment of these patients, which previously may have been referred to surgery or had just gone to hospice. And now we find these patients are either surgical turn downs or interventional cardiologists are more aggressively treating them and in some cases they may be using hemodynamic support. They're treating bifurcated lesions. They're treating left main lesions. They're treating patients with severely calcified lesions. And so these patients historically have been excluded from most past clinical trials. They are patients who often times frankly haven't been treated that well. And so now we have institutions that are really focusing on their care. And I think over the course of the past couple of years as I have been in this role and observing this, I have really seen a change in the environment, where we are seeing very large institutions that are dedicating large portions of their practice to the care of these difficult-to-treat patients. And we really now are trying to take what right now is frankly a small installment of just 20 sales reps, focusing them in territories where we know we have these large coronary accounts that are dedicated to the treatment of complex lesions. And we're really trying to leverage those changes in the environment to accelerate our growth. I think the opportunity is there, and I think it will continue to grow over time. It's not a good explanation of the past versus the future, but I think it gives you some perspective on why I think this will be successful. Larry, do you want to comment on the CAD numbers?

Yes. Bob, you're probably tracking life-to-date accounts on coronary. That would be about 700 life-to-date accounts. Now we do lose some over time, don't lose but some become more remote users or limited users. So I would say the more active accounts is closer to 600.

And the next question comes the line of Brooks O'Neil from Lake Street Capital.

So I was listening as carefully as I could about all the things you're going to do to drive growth. And I think you have a nice list of activities that you're focused on. Would you be willing to comment at all about the profile of the business you hope to create as you go forward in terms of such things that investors like to know sort of what you hope the revenue growth rate might be as we move out of -- your fiscal 2018 and fiscal 2019, the profitability metrics, any of those things?

Brooks, I think what we can say is, we've worked really hard over the course of the past couple of years to stabilize this business and get it back on track. And I think where we stand today, we've got a good strong company. We're in a good stable position. We've got a really important core technology that physicians use to treat a very well-defined unmet medical need. Our sales reps, we have 200 sales reps and now roughly 85 support personnel out there that are routinely attending cases and who are present standing shoulder to shoulder with these physicians and caring for these patients. And we now are in control of our own destiny. We are now in a place where we can continue to really and develop and provide products and other innovative solutions that can help treat those patients and support our customers in the care of that specific patient. We're in the process -- obviously, we're heavy investors in research and development. And we're in the process of developing our sense of vision and direction around this. And I think in time we'll be better positioned to give you more specific information on exactly how this might drive our growth or expand our business going forward. But for right now, we've talked about really just trying to increase our revenue per procedure. We're starting out relatively simple with the addition of these OEM products and distribution products. And that's mainly because these are things we can do and we can do quickly and we can execute on. And there are opportunities that are immediately available to us. Over time, we'll continue to expand and broaden products based on our organic development, and that will be focused on what we like to call our patients. Patients, we're already supporting customers and caring for these patients.

That make sense for me, and I appreciate all the color. Can you just give us a little more insight into Japan? Obviously, you made some basic comments there, but sort of a what's going on over there now, and what you'd expect sort of as we get through the end of the year in 2018?

Yes. I'd love to be able to do that. I just don't -- I don't have much more that we can give you an update on. The MHLW process is a process that as you know from watching other companies who have been seeking approval in Japan, this is a process that has a lot of uncertainty in it. And you work with them, you eventually submit your dossier. They take the time, they need to review it, and then you hear back. I know it sounds terribly basic, but that's just what we had. I can't give you much more color on than that. We are on hold. In the meantime, we're working with our key customers there. We're working with MediKit, our distributor there. We're continue to get prepared for the launch. We're doing everything we can to be prepared when the reimbursement approval comes through. And that's about all we can do right now until we learn more from MHLW.

Cool. I get that. And then are you willing to talk at all about international markets beyond Japan, any thoughts about where you might head next?

No. We're going to stay focused on Japan for right now and make sure that we get that done right and that we can leverage that opportunity. And then we'll eventually have a good international infrastructure that will be built based upon our distribution in Japan. And from there we'll expand. But we're not ready to comment on what our next targets would be at this point.

And we have no further questions at this time. I would like to turn the call back over to you, Scott Ward, for final comments.

Okay. Very good. Thank you, and thanks, everyone, for your continued interest in CSI. We look forward to updating you on our progress in January. And this will conclude our conference call. Thank you.

Thank you for your participation. This does conclude today's conference call. You may now disconnect.