Q4 2020 Earnings Call

Ladies and gentlemen, please standby your conference call begin momentarily. Thank you for your patience and please standby.

[music].

Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2020, Abbeel net earnings conference call. At this time, all participants' lines are in listen only mode.

After the speakers presentation, there will be a question and answer session.

A question during the session you'll need to press Star then one on your telephone.

Please be advised the today's conference is being recorded.

If you require any further assistance. Please press star then the around.

I like the hand, the conference over to your Speaker today Mr. Todd trap, Sir you may begin.

Thank you Crystal and good morning, welcome to Abbey mid fourth quarter fiscal 2020, <unk> earnings Conference call.

Let's just talk trap, Vice President and Chief Financial Officer, I'm here with Mike Minogue, Abby image, Chairman, President and Chief Executive Officer, and Dr. chefs those areas I'd be image Chief Medical Officer.

The format for todays call will be as follows.

First Mike will discuss fourth quarter business and operational highlights and then I'll review, our financial results, which are outlined in today's press release.

Next dr. stuff those aireon will provide a clinical update related to covert 19 in the role of Impella in Ecmo in treating these patients, including two case presentations.

After that we will open the call to your questions.

Related documents can be found on our website under the Investor section.

Before we begin I'd like to remind everyone that today's call includes forward looking statements.

Company cautions investors that any forward looking statements that involves risks and uncertainties and are not a guarantee of future performance.

Actual results may differ materially due to a variety of factors identified in our earnings press release in our most recent 10-K in 10-Q filed with the FCC.

We do not undertake any obligation to update forward looking statements.

This presentation also contains some scientific discussions a future medical devices and indications, which have not been declared approved or otherwise evaluated by the U.S. food and drug administration.

It is intended for investors only it is not to be used for medical treatment purposes.

Nothing here in constitutes a claim regarding the safety or efficacy a future products were indications.

With that let me turn the call over to albumin, Chairman, President and Chief Executive Officer, Mike Minogue.

Thank you Doug.

Good morning, everyone.

I'd like to start for saying I Hope you and your loved ones are saying safe and healthy.

Everyone Italian med, we'd like to express our thanks to the frontline healthcare workers and medical community for all they're doing to support patients provide much needed medical care.

Also.

I appreciate our employees, who continue to directly support patients 24 by seven at hospitals.

And our headquarters manufacturing service and shipping teams, who continue to come to work to make and ship, our Impella heart pumps and I'll be met our culture of patients first drives our execution and this crisis is bringing out the best of our employees and customers, we're helping hospitals and caregivers bye.

Donating in shipping protective gear, including gloves shields, surgical masks and Cadninety five mass directly to hospitals and government agencies, serving our communities.

In addition.

We help manage patients onsite and online in the cloud within pellet connect at over 130 hospitals.

Oh, so stepping up the rollout of in pellet connect which is a hip a compliant service that allows abbey mad personnel to remotely monitor the impella console and interact with the medical providers appropriately on hemodynamic management alarms and winning we provide this onsite and on phone support at Noah.

Additional cost to our customers as part of our commitment to improving outcomes.

We currently have identified more than 100, Kobin 19 cases now in our Impella quality assurance or I Q database every Friday, we host 200 plus positions on our Covidien 19, Skype call to identify lessons learned in treating cobot 19 patients with cardiogenic shock market ideas or.

Again failure and spit reduce specific case studies on Impella and Ecmo support.

And finally, we've created an online I'd be med prayer community and then Abbey Med charitable foundation to help employees and those in need.

Now looking back at the fourth quarter in February we saw a U.S. business stabilize through the first half of March despite two misleading publications by mean Andrew by.

Appearing in print we believe.

That our actions to educate the medical community on the lack of the validity of this studies to highlight 14 years of F.D.A. audited Impella data.

And to present more recent and robust publications.

Having the desired impact with positive momentum in early March however, the business was negatively impacted in the second half of March from the Kobin 19 pandemic.

As a result, I'd be met delivered 207 billion in revenue flat year over year with an operating margin at 28.1 person. We believe that cobot 19, reduce Q4 revenues by 17 million or eight points of growth.

For the full fiscal year revenue of 841 million increased 9% versus fiscal year 220, 19 with operating margins of 29.6% Todd will provide more details on the financials shortly.

For today's call I will cover our business in the Kogut 19 environment.

Highlight our key fill 21 goals to transition to Abby amid chewed auto and provide updates on new products and our strategic acquisition of Act mode Technology announced Tonight.

So first I will highlight our Q1 plans to adapt and execute we are preparing for the worst and hoping for the best.

Our company priorities have aligned around supporting patients in customers protecting the safety of or employees and their families and manufacturing our life saving heart pumps.

Our number of in pellet patients in the U.S. and E. U declined approximately 45% from mid March into April from last year heartfelt remains the leading cause of death.

And it will continue to increase with co bit 19 in the overall population.

However.

In the short term our impella procedures have limitations because many patients are staying home in compliance with local and federal regulations.

And out of fear, they're not going to the hospital.

We have seen that these delays will worsen outcomes as reported by agencies around the world <unk>.

Unfortunately until governments in health care officials allow physicians to ramp up patient treatment with acute symptoms elective urgent and emergent patients will be limited.

In the long term there will be an increased need for impella support because eventually the high risk and cardiogenic shock patients will emerge from home with worse Angela.

Heart failure or myocardial injury post covert 19 recovery.

The Corona virus initially attacks the lungs and for some leads to failure of the heart and kidneys with right heart failure from pulmonary embolism.

Mark good ideas or cardiogenic shock.

We see impella as a viable invaluable solution for these extremely sick patients in Chicago with heart failure and in the coming months more case studies will be published.

For the fiscal year, we have designated a three phase red yellow Green plan for the company to face the realities of the current market and to keep our team engaged and focus on our goals.

This approach will allow us to come out of the pandemic ready to grow the business and help patients with our life saving technology when demand returns.

Our Q1 environment is called Red due to the restrictions noted on elective cases and access to most hospitals along with limitations on headquarters operations.

During this red phase, we are supporting patients maintaining inventory accelerating and pellet connect reducing costs and investing in innovation to meet the needs of the next phase of recovery.

We've also taken steps to mitigate the negative business impact of Corona virus, we've adjusted our costs to more appropriately match our revenues in Q1.

These reductions are designed to share the burden across the business and start with salary cuts for the leadership team.

This will protect our cash reserves preserve full time jobs allow for investment in innovation and position us to achieve our fiscal 21, Abby met two dato goals.

Overall this red action plan is intended to last through Q1.

We are focused on controlling our own destiny by increasing our revenue and patient utilization sequentially in each month through June.

Our employees already are wearing protective gear in mass that we've been able to provide and during this time. We also plan to be testing our employees for the co bid 19 antibody.

We've adapted our business model with more interactive and online internal and external training education and patient support.

This is what we call I'd be a mad to Dato, which encompass is smart assist impella connect can't P.T.I., which is interactive an online training and education.

How do you met chewed auto will augment and accelerate our training data and time playbook in fiscal 21.

We believed that the recent elective procedure guidance by government agencies and CMS has started the recovery phase.

Or yellow phase in selected areas of the country. We think this increases utilization into this summer months. This yellow summer phase will allow for more protected PCI.

And the return of protocols for STEMI heart attacks and cardiogenic shock.

Medical societies and government agencies have also initiated media campaigns to advise the public to seek immediate health care support when experiencing heart failure.

Finally in the second half of the fiscal year, we transition to phase Green as we are back supporting more patients in the hospitals, providing internal and external training and education online with camp <unk> and virtual Proctoring and manufacturing again at a higher.

Capacity in both Danvers mass and then Aachen, Germany.

[noise] independent of these three phases, we will remain fanatical on achieving our fiscal 21, Abby emad to Dido goals on product innovation, Impella connect and can't PCR wheel prep prioritize and fully fund these initiatives because we have the benefit.

All of our solid balance sheet with no debt.

I'd be met chewed auto will drive accelerated rollout of our remote interface technology with smart as says and in pellet connect the smartest. This platform is now used and 900 of our 1441 U.S. sites and assist 80% of in pellet procedures.

Within the fourth quarter, we also expanded Impella connect to 50, new sites and today, we are in hundred 31 hospitals and more than 200 additional hospitals already have the hardware installed and simply required the hospital Wi Fi permission.

I'd be mid plans to transition the majority of our hospitals to online and pellet connect monitoring in fiscal 2001.

This captured console data will further help us create and improve new AI algorithms to optimize patient care.

No other company in this space has this capability.

Im at Judaeo will launch can't PCR high which stands for coronary artery myocardial protected PCI.

Can't <unk> is the largest online interactive education and training endeavor in the company's history.

It will be led by a faculty of experts in the field of high risk PCI and circulatory support this online password protected training platform gives us the ability to reach thousands of physicians remotely and share best practices techniques and technologies to achieve more effective.

And complete PCI.

We are launching can't be <unk> this quarter, and we will conduct a virtual user meeting for the faculty and top users in June.

We are focused in fiscal 21 on advancing our innovation overall, starting with the rollout of Impella 5.5 with full market release in the U.S. The limited launch of Impella five five would smartest says is progressing well and is now in 69 of our top sides with publications pending on over 300 patients.

Built for surgeons. The Impella five five is the most blood compatible heart pump on the market. It is the only forward flow.

Fully unloading pump designed to be winnable with smart assist AI algorithms since it is inserted through the actual Larry artery. It does not require a sternotomy and allows for immediate patient ambulation, which has been shown to improve outcomes.

Well co bid 19 travel restrictions in March delayed our first in man study for Impella easy Pete we were ready and confident.

We will deliver on key milestones for this nine French three plus leader heart pump ideal for a high risk PCI.

We plan to enter the U.S. the year within early feasibility study for Impella E CP and the application was submitted to the FDA yesterday.

Additionally, the late majority of adopter customers want smaller access and closure today.

We made significant product on our new expandable and recoil sheet for Impella 2.5, and Impella CP, we plan to submit a five 10-K application in Q2 for the expandable sheath for Impella two five followed by Impella CP.

We're confident that both Impella E C P and our new sheath product for Impella, two five and CP will allow us to break this small bore barrier in percutaneous heart pumps and utilize nine French closure devices.

Having said, we'd like to also recognized and thank the F.D.A. for their fast execution for all of our many submissions and studies with efficient online calls and real time reviews.

We're also making strategic investments in innovation and are pleased to announce the acquisition a breather after several years interacting with Dr. Bart Griffith.

Foundry Breeze and professor of surgery at University of Maryland.

He is a pioneer in the field of heart and lung transplantation and Ecmo overall.

Many physicians over the years have asked abbey med to bring this technology into our portfolio because of our ability to support patients.

Each best practices and collect critical data for research.

This ecmo technology will allow us to treat cardiogenic shock patients requiring oxygenation, who are already being supported with impella about 10% of our patients.

Add ecmo pediatric offerings and treat a new patient population with respiratory failure.

This acquisition provides abbey met with the opportunity to innovate traditional ecmo technology, focusing on patient ambulate action and recovery from acute respiratory failure, such as a our D.S. H one N one sars and covert 19.

For many patients cardiogenic shock impella is the optimal technology because it unloading the left ventricle it for fuses and organs and allows the heart to rest and recover.

In that recognizes patients in cardiogenic shock or cardiac arrest. They also need oxygenation ecmo per fuses the end oregons, but does not unload the left ventricle, which increases the auctions of man of the myocardium or heart muscle in these patients.

For patients in cardiogenic shock, requiring oxygenation impella and Ecmo called Acapella worked together to unload the heart and oxygenate. The body, we have already supported and collected data on more than 8000 acapella patients in our Q database and ex Pella.

Now becomes an important role in expanding our patient population.

Breeze is the life work of Dr. Bart Griffith based on his desire to have a portable integrated all in one artificial lung system that is compact and easy to manage adding that inbreed are now in the process of completing the five think a clearance and planning a limited market release.

In our fourth quarter of fiscal 21.

We will cover Ecmo in more detail during or virtual investor call in May.

As an example of what Abbey met chewed auto will look like in the future I would like to cover a patient story.

We recently had a very sick 43 year old woman with Covidien 19, and shock on Impella 5.5, with smartest says Impella connect and VB Ecmo.

Rejection fraction was below 10%, which means our heart was barely working a team of abbey med physicians and scientists along with the local team and call Center officially monitored for several times a day watching every way form an alarm.

The treating physician and caregivers interacted with Abbvie, a mad at every level and evaluated the wave forms to optimize oxygenation waning and write hard support the physician Incharge believes this technology and engagement improved the management experience and the ultimate outcome I'm pleased to share that dish.

John Woman was X planted and discharged to home with their native heart and in nearly normal ejection fraction.

In closing I'd be med will be smart disciplined and innovative in fiscal 2001, our operational discipline allowed early profitability as a company and built a sizable cash position with no debt.

We have built a brick house and substantial IP portfolio, we will enter the challenges and come out scrap stronger as Abby amid to dato because of the investments in innovation do you have products that are smaller smarter and more connected in the cloud with AI algorithms for heart recovery.

Yeah.

We will share the sacrifices to reduce expenses it take great pride, knowing that our people and impella hard pumps are helping save lives during this global crisis.

Above all I remain grateful to my employees and customers and confident in the technology and opportunities for abbey amid.

I will end, how I started by recognizing all the heroes at the hospital is taking care of our communities the God bless them and their families.

I'll now turn the call over to Todd or CFO.

Thank you, Mike and thanks for joining the call I.

I hope everyone listening any families are staying safe.

Turning to the quarter, we delivered revenue of 207 million flat versus prior year.

We were still feeling some of the impact in January and February due to two misleading publications in print within the quarter as Mike mentioned in the first half of March we were beginning to see a positive momentum based on the actions to educate the medical community on Impella FDIC studies.

Through the first weeks of March U.S. patient utilization was up 11% for the month.

In the second half of the month, we experienced a dramatic drop inpatient utilization due to covert 19.

The impact was broad based across the U.S. and in Europe.

We believe that covert 19 pandemic impacted our topline by 17 million worth eight points of growth in the quarter.

By geography, U.S. revenue declined 2% to 172 million with a 5% decline in U.S. patient utilization.

In the U.S. at the end of our fiscal Q4, the Impella two five and CP have reached 1441 sites.

The Impella five BOE has been placed and 649 sites and the RP is in 533 sites.

The new Impella five five with Smartassist is now in 69 sites.

We continue to receive positive feedback from the surgeons on this new breakthrough technology.

The reorder rate in the quarter was slightly above 100% consistent with the rate from prior year.

Average combined inventory at the hospitals for the Impella two five and CP was approximately 4.7 units per site inline with the inventory levels, we saw last quarter.

Outside the U.S. revenue totaled 34 million up 15% on constant currency driven by continued strength in Japan.

Our European revenue increased 6% on a constant currency basis as previously stated our business in Europe saw a significant deceleration in utilization in the second half of March due to covert 19, primarily in Italy, Spain and Germany.

Our Q4 performance in Japan was in line with our expectations as we delivered 8.4 million in revenue.

We opened six new sites in Q4, ending the year with 115 sites.

As a reminder, we had communicated that we would open less sites as a team focused on the post approval study in a broader CP launch at existing sites.

In Japan, we did not see a material impact on patient utilization from the virus in the quarter.

However, our business has softened in recent weeks as Kobin cases in Japan rise after a state of emergency was declared on April 7th.

Gross margin was 80.9% in the quarter compared to 83.2% in the prior year.

The year over year variance was driven by the smartest this launch and pellet connect and lower production volumes.

We introduced Impella CP with smart assist at 283, new sites in the quarter.

Our smartest. This platform is designed to improve outcomes with real time intelligence, providing smart advanced metrics to better position manage in when patients in the I see you.

In the fourth quarter R&D expense totaled 25 million roughly flat versus prior year.

We continue to invest in clinical research and a new product development for our small board devices like the expandable she's in Sep.

SGN expense for the fourth quarter totaled 84 million up 3% versus prior year.

In the quarter, we increased our U.S. feel team by 30 reps.

These new reps will have the normal learning curves and we believe putting more feet on the street will enable us to go deeper in hospitals and drive higher Impella utilization once a pandemic is more contained eventually subsides.

In the quarter operating income was 58 million translating to an operating margin of 28.1%.

The year over year margin performance was a function of our ongoing growth investments, which more than offset some favorability from stock based compensation.

GAAP net income for the quarter was 32 million were 70 cents per diluted share versus one dollar and 60 cents in Q4 2019.

The year over year performance was primarily driven by a mark to market adjustment on our Shockwave investment.

Our reported tax rate for Q4 was 19% versus 25% in the prior year due to excess tax benefits and increased usage of foreign tax credits.

Now turning to our full year performance.

For fiscal year 20, we delivered revenue of 841 million, an increase of 72 million or 9% versus prior year.

We saw solid growth across the globe from continued adoption of the Impella platform.

Japan had a strong year delivering revenue of 35 million up 101% from 2019.

Operating income was 249 million up 11% compared to the prior year.

We expanded operating margins 40 basis points to 29.6%, while continuing to make the necessary investments to support our future growth.

Net income for the year was 203 million or $4.43 per diluted share.

Versus $5.61 in the prior year.

The year over year variance was driven by a higher tax rate from excess tax benefits in our mark to market on our Shockwave investment.

As we look ahead, we are focused on liquidity in this uncertain environment and I want to highlight our robust position.

Our balance sheet remains strong.

In Q4, we generated 87 million of operating cash flow and 315 million for the year.

As a result, we ended fiscal year 20, with 651 million in cash up 27% versus prior year with no debt.

We will continue to be disciplined and have the capital necessary to stay focused on the long term.

Now turning to our fiscal year 21 outlook and guidance.

As we described in a press release, because so much depends on factors beyond our control such as the duration or extent of the covert 19 crisis in recovery.

There is simply not enough visibility to provide a reliable estimate for Q1 more for full year fiscal 21 at this time.

As Mike mentioned Q1 is our red phase in April run rates were down 45% versus prior year.

We will continue to monitor the uncertain environment and provide an update on full year guidance when appropriate.

We've adjusted our costs as described in our 8-K.

This will protect our cash reserve preserve full time jobs allow for investment and innovation and position us to achieve our fiscal goals.

These actions taken since March have included a hold on hiring.

Eliminating non critical consultants contractors and temporary workers, reducing discretionary spending and implementing ultimate work schedules for the OCC in endeavors production teams.

Our CEO and COO have reduced their salaries by 100%.

Vps in directors have reduced their salaries by 50% and 20% respectively.

For the quarter.

As a board also the board of directors have reduced their cash retainers by 50% for Q1.

Again these reduction reductions are designed to share the burden across the business and start with salary cuts the leadership team.

For non director employees at Danvers in our Aachen orders, they will be taken a minimum of one week furlough or under use vacation.

This strategy allows personnel to remain Abby met employees and will allow us to quickly ramp up when demand returns.

Our commercial fuel team will work on monthly operating plans to allow for flexibility and the potential to increase sequentially each quarter.

We will adjust as a quarter progresses.

Overall these cost actions are intended to last through Q1.

But we will continue to monitor the environment and extend these actions if necessary.

Before I conclude one housekeeping item to mention.

As expected due to the current situation on social distancing, we will not be hosting a full investor day in person at our headquarters on May 27th.

However, we are adapting and we will be hosting it condensed virtual investor event focused on innovation clinical data and Ecmo acquisition on the same day.

Details will be forthcoming.

In conclusion I want to personally think our customers for their continued support in express my gratitude for our talented and loyal employees. During these very challenging times throughout the year I have stayed in close touch with reps and physicians, who allowed me to join them in the fields and I have been in Spain.

Hired by all of our patient stories.

As these experiences coupled with our innovation, our clinical data and our dedicated field team that gives us the confidence in our ability to not only managed to this crisis, but to emerge from its stronger.

Now I will turn the call over to Dr. stuff Bilazarian.

Thanks, Todd I'm glad to join the call today and provide commentary on what Abby unmet medical office is learning from our physician physician customers with our covert 19 physician Advisory Board, which includes representative from Italy, Germany, Canada, Japan and the U.S.

We will conduct our six weekly call tomorrow with over 300 physicians from around the world.

The weekly calls with the physicians share literature updates focused on cardiovascular complications of cobot 19.

Each week a short literature review is provided in cases are presented from hospitals around the world. The literature on cardiovascular complications is evolving rapidly cobot 19 itself can affect the heart in a variety of ways as highlighted on the slide 15 in the deck and may directly affect the myocardium, causing mild.

Guidance or via a hyper Kwai global state presenting as an acute coronary syndrome with clot, resulting in my cardio infarction, whereas a pulmonary embolism or critical limb ischemia or stroke.

Many of these severely sick patients are candidates for mechanical circulatory support and Ecmo. However, most have not received either therapy because of the resource constraints in hospitals.

Impella has the potential to increase end organ profusion and reduce cardiac workload in shock related to these covert 19 presentations and may also stabilize patients while anti viral or anti inflammatory therapies are deployed.

Additionally, Impella is ft approved for my our car died us based on clinical data showing a direct disease altering effect by inhibiting the mechanical transduction pathways of inflammation.

The Impella and Ecmo platforms are effective tools to tackle the hemodynamic features of covert 19, which might require uni ventricular left or right ventricular supported unloading using the impella CP 5.0, or 5.5 or the Impella RP.

Also the configuration of Biventricular support referred to as bipolar with Biventricular support using Impella, both the left and right ventricles or combined with Ecmo and then acapella configuration.

In addition to the case that Mike shared I'd like to highlight two recent case is presented on a Friday calls.

That highlight the versatility of the Impella platform to support varied patient presentations. The first case with a 57 year old patient with recently convert confirm positive covert 19 test who presented with a deep venous thrombosis and pulmonary embolism due to the hype required double affects of covert 19.

The patient had massive pulmonary embolism and with kit from masterfully by doctors, Ted Schreiber in a mere khaki at St. John's Ascension Medical center in Detroit.

The patient had enormous clock in transit in the right atrium that was successfully retrieved using an angiovac and then the patient sustain cardiac arrest requiring CPR.

The patient had the Impella RP rapidly deployed with almost immediate restoration of systemic pressures and an incredibly impressive image shown in the slide 17 and 18.

The patient blood pressure Roger Rose from assist talk blood pressure of 68 millimeters of Mercury to over 140 in 10 seconds. The.

The patient recovered and was discharged.

The case highlights the lifesaving value of early recognition a reference you're going to failure inappropriate early implementation of the Impella RP to support patients and this is an example of the Uni ventricular support critically needed in some patients.

This case was highlighted on HCC tutorial with over 22000 impressions and I'd urge you to look at it that the link is in the slides to see the video of the clotting extracted and the amazing blood pressure recovery after Impella RP.

The second case of a cobot 19 infected patients was published in the journal of style and is highlighted on slide 20. This is a 52 year old man recently discharge after an acute myocardial infarction Freiburg, Germany. The patient at a presentation initially interpreted as acute congestive heart failure, but the patient rapidly decline requiring high levels of Oxford.

And then ultimately develop cardiogenic NVS hopefully Dick shock suspicious to support it was impella CP with smart assist and not initially V.A. then switch to vivi Ecmo will support over 17 days before the patient status adequately stabilized to allow removal of support this case highlights.

The value of left sided support in combination with Ecmo platforms.

In the intermediate term, we suspect that delayed care will result in more advanced heart failure for patients and a greater need for mechanical circulatory support. In addition, one of the longitudinal has its of Sars infections like Coven 19 in the past has been metabolic arrangement, such as cholesterol or lippitt.

Abnormalities.

<unk> increased patients risks for after scruggs disease in future years.

All of these unfortunate and outcomes of covert 19 infection provide an opportunity for apio met and the Impella platform to improve patient outcomes and to continue our mission of heart recovery I'll now turn the call back over to Todd trap.

Thanks, Youssef So Chris I think it's now it's time to open up the a call for questions.

Thank you ladies and gentlemen, if you have a question at this time. Please press the star followed by the number one key on your Touchtone telephone. If your question has been answered or are you with your move yourself from the Q. Please press the pound key once again to ask a question. Please press Star then one now.

I know first question comes from Margaret Kayser from William Blair. Your line is open.

Hey, good morning, guys. Thanks for taking the question.

At first one for me and since a little bit of a follow up on the covert 19.

Common say made so.

Can you give us a sense the impact of Coke 19 on the referral networks for high risk PCI cases, or because it doesnt sound like cases are down 45%, but I guess does it get better from here just sensation come back into at certain facilities and get tough said or is there a little bit of a gap period between that.

[noise] market. Thanks for the call. So I would answer that in a three phase component. So currently read the referrals aren't happening because the cath labs and surgical suites are essentially closed down and many of these centers that are hardest hit a areas like New York Detroit.

And what we've seen is that many of the intervention cardiologist surgeons, especially the younger ones are treating patients in the eyes to you and all the ice you beds and overwhelmed areas our full.

From a referral perspective, the delays that I've been happening where people are not showing up in the hospitals were chest pain.

We'll continue to build and what you've also seen is by all the societies cardiovascular societies is differentiating cardiovascular disease as not truly being elective theres a difference between somebody having chest pain, and having a PCIA versus someone to having an orthopedic procedures. So that's the first component. The second is they've already started national.

Campaigns and this is happening as well in Europe to advise the general public to seek medical support if they're having chest pain or other heart failure condition. So we're in the Red phase now there are certain pockets of the country now whether it was guidelines are opening up so they're starting the yellow phase we think that progressed as to the end of this summer.

And then we expect it to go back open by the time, we'll get to the second half of our fiscal year.

Okay. So sounds maybe the 45% hard to know I know you guys aren't setting guidance, but maybe that's a worst case scenario and maybe gets better I like you said as you go through that yellow pages in the green paid.

So on.

Correct. There were a you know we're trying to prepare for every.

Worst case scenario, but we do believe that the.

Early weeks of April and the end of March were really the most severe and that's why we're really focused on so sequential growth weekly as we end the Q1.

Okay, and then just one more in terms of the acquisition breed that you referenced the 10% of cases, but maybe could be good candidates that can you walk us through what you expect that makes them Colin I pulled it looked like let's say five years from now and how do you think clinicians will approach. These everybody's between that one thing.

Good question. So thanks for the the comment on Ecmo currently were about 10% of or patients get acapella for us and that's what's represented in the Ike you database.

We also believe that when you combine unloading with oxygenation, you get better outcomes, which is why many of our physicians over the years I've asked us to add it and there's multiple publications that we've referenced in the press release, demonstrating that acapella. So a patient in shock that requires both human and Amex and Oxygenation Act pellet gets better.

Outcomes than Ecmo, only and that's that's well documented over the years, what did I would say that in the next five years, we're going to continue to innovate.

Because we combined the technologies and we've got the world small as hard pumps, and we can do left and right side support you're going to see real a new innovation come to that space. This cold at 19 time has shown that many of the technologies that are out there for oxygenation and hemodynamics are already 20 years old and there are five 10-K technologies.

So they havent been put through a P M a.

Safe and effective process and so we were going to bring that same discipline in innovation the integration of our waveforms integration of what's happening these patients and we'll be able to optimize both oxygenation and unloading because the and game and goal is to keep the patient alive and send him or her own.

Home with their own heart like the case example, I gave a 40 year old woman.

Thanks, guys.

Thank you. Our next question comes from Raj Denhoy from Jefferies. Your line is open.

Hi, Thanks, good morning, everybody.

Smart I was wondering Mike maybe I can start with what you. The comments you made around early March was you were still recovering from the AJ issues from last year. You noted that you were starting to see some some growth and so I'm curious what what was actually happening. If you could provide some more detail about what was perhaps resonating what was starting to turn the call.

Sure.

Some of these accounts it maybe a push back on Impella initially.

Sure I show the the two misleading papers went to print, but that also gave us an opportunity to further analyze them and educate the community just so starting with we just looked at the data the validity of that information.

We were able to acquire the information for the a mean paper and have insight into that there's a reason that the the the outcomes weren't given just odds ratio because they're essentially the same and there was sicker patients in the Impella population, which is what we expected. We also have evaluated the other paper for.

The exact time period in the Q database and shown that patients a got impella before the PC I had better outcomes and the Jama paper mixed in bailout patients with our PPCI. It's important to note that Abbvie met has a technical bulletin that's been out for over a year that had been submitted to the FDA showing that we get back.

Her outcomes and optimize safety and effectiveness for patients in shock when you put the impella end before the PCI and where you reiterated all the papers and publications that are out there from better and more robust databases to demonstrate that which includes also NCS side and then one other paper had come along that was.

As a generated by multiple centers, but the first author and senior offer were from Cleveland Clinic again, showing that if you do a better job with high risk PCI with Impella, you get better outcomes and you also reduced length of stay so that that also was published this last six months or has been.

An exciting component of production of new papers, and what you will see for the next six to 10 months is a slew of papers coming out for high risk PCI for shock and it's really being generated in done by our best users that have already been publishing their data and so I think you're going to see over the next.

Six months really the validation that impella supporting high risk PCI enables better outcomes and that's kind of the component of what campus about its optimizing the PCI that achieves higher F post procedure, you're not doing the PCI to do a PC, how you're doing the PCI. So the and have the patient see an improvement in F.

And youre going to consistently continue to see real data from sites that are doing it today getting better outcomes and cardiogenic shock. So that's that's been very helpful. We also use the opportunity to explain the history of all the studies and I think a one of the benefits of camp and doing these user meetings is be able to put in front of our user base.

A history of Impella from 2006 to 2020, all the FDA data all the existing post approval studies and really demonstrate that this is the most studied heart pump in the history of the FDA as well as what we're competing with Theres technologies that are 20, plus years old that don't have a single ft. A study and so I think the.

Credibility and most important the fact that these physicians can refer back to patients that they've sent back to the referring community. The referring physicians that have better outcomes and improvement in you have is really what we again validated our story our story and provided that momentum back.

Hi, guys understood.

The Roadshows fresher, Yes, Hey, Ron just quickly to I think a one of things we highlighted last call that we would be conducting some road shows.

In February in early March and we hit seven cities.

Anywhere from Dallas to Minneapolis, and I would say it was all about clarify in educating and really just kind of displaying our future innovation clinical roadmaps and we tracked the attendance.

For those road chosen to the utilization before and utilization. After we started seeing some traction from those roadshows. Unfortunately, they got cut a little bit short because of coven 19, but some of those road shows we're starting to pay a little bit of dividends as well from a patient utilization perspective.

In the intent <unk> is to make that roadshow online in the past were protective environment, where physicians are presenting to other physicians and as part of that community.

The user base can ask questions and get receive responses on an ongoing basis on any subject.

Right right so.

A couple questions on cobot, as well and I guess the first one is sort of related to that there was so now now that we're in this period, where you can't directly engage with physicians one on one how are you now transitioning that in the sense do you think you'll be as effective in.

Education in overcoming some of these misperceptions, perhaps that's now that you can't engage directly with physicians one on one.

So Roger we feel fortunate because we were already planning for abbey met to though you all have heard US talk about this over the last several earnings calls so smart assistant in pellet connect give us that real time connection to physicians, while the patients on support.

It lets us all communicate can't PC I was already in process and the faculties already been selected they've actually been here to headquarters for multiple meetings, which now we're launching Oh, we implemented Skype over 18 months ago globally, and we automated our finance and customer center. So you know we talked to FID.

This ends quite regularly now on Skype on calls we've been incredibly productive on working on protect for we've already selected our executive Committee, we have exactly selected the country leaders and the technical Committee and we've been frankly, using the time and.

The new tools that are out there made us a very effective I personally I conduct face time or Skype calls each week with multiple physicians and a as as Seth mentioned, we have you know 200 plus people calling in every Friday. So Seth maybe you could comment on your interaction yeah, I think that that's that's all true.

Mike summarize what I would I'd add is is that for the last several years, we've really been building our digital assets with protected PCI dot com variety of video and other educational platforms. The growth last year was it was exponential well be off before covert 19 with.

Recently introduced frequently asked questions page to really help clarify utilization issues raising awareness about the product in our therapeutic areas. So that that's already been in place of course, we expect to expand and Richard with camp and have it be not open to the public but be protected password protected environment.

So I think that we are well positioned it if there isn't anything like sitting with a person, but we think that we're well positioned to be in a remote virtual environments for education and interaction with our physician customers.

We've also understood well by well I'm, sorry, if I just make one more comment is that we're well along and expect in this quarter to demo our first use of visual well virtual proctoring, we'll be able to use technology platforms with a remote proctor to essentially be standing by virtually.

In the Cath lab with a physician to step by step instruct the physician on any areas about use of impella or protected PCI case. So so that was already also underway before covert 19, and and we will be demonstrating that in the next four to six weeks.

Understood. Maybe then my last one was just a clarification. So the 45% fall off you saw in April.

With that equally balanced between high risk PCI in shock or did you see a heavier fall off in one or the other.

Oh, it's heavier in high risk PCI, a and then it gets a lower when you start getting into the shock patients. However in many of these cities cardiac arrest patients weren't necessarily being resuscitated or weren't necessarily being taken to emergency rooms, and unfortunately some of the.

Them that did get to the emergency rooms, I didn't get further treatment a door to balloon time, which is how fast you get from the yard to the Cath labs is more than tripled in most cases, and many patients diskette ltchs or blood thinners, a and sit in the E R or because they don't have the ability to treat them. So it's a tough time for many out there, but it's going to come back.

But that's why the elective cases get hit but overall everything is down when the cath labs in surgical suites aren't being utilized.

Okay. Thank you.

Thank you. Our next question comes from Chris Pasquale from Guggenheim. Your line is open.

Thanks, a lot to ask that I wanted to start with making sure I understand the red yellow green progression. So is there any way to think about it that one Q is red twoq use yellow and then the back half of the year is green and what is the plan actually assume per procedure activity in the Green phase are you baking in any sort of catch up from Los cases or.

Just sort of back to pre koby levels.

So Chris Thanks for the question. That's the plan now if red extends past Q1 will extend our our plan of attack for Q for Q1, if we start to see it ramp a little faster, which we hope to start seeing each week now a then we'll get to our yellow phase earlier I can't put any exact weaker.

Her month on it but that's the way, we see things progression and we've already seen some signal right now in the last week with some of the.

New parameters, that's been put in place to treat elective procedures in the back half Green, we do expect that there will be a little bit of catch up but we also know that there's going to be limited time or space and the cath labs, but we're also excited because on top of all those things. We now have new patients that we'll be able to treat so the five five full lunches happen.

During we think we're gonna see a little bit of a rebound in the Impella RP and by the end of the fiscal 21, we expect to be piloting and starting with Ecmo. So these are all be.

Better products, new patients and also adding in those patients requiring oxygenation.

Thanks, and then I appreciate visibilities unusually poor right now so I'm not surprised at all by the decision to pass on giving guidance, but can you share any color on how you were thinking about what F. why 21 would look like prior to the world changing in the past six weeks.

Yes, I mean, it's a good it's a good question.

Yes, I mean, you all see we're coming off of a have a Q4, where we had some noise around the two misleading publications I think we started seeing as I mentioned some positive momentum in March given some of the initiatives that we laid out and so again up until March we were seeing.

11% growth in U.S. patient utilization, so as we as we thought about next year. You know we're excited about some of the things that Mike highlighted we had the five five launch we had to expand well she's coming in the fourth quarter, we're launching camp.

All these online interactive training curriculums. So we felt we felt we were going to set up for a pretty solid fiscal year 21 based on kind of what we see what we were seeing exiting Q4 and all the initiatives that we had on the place on our plate.

Thanks.

[noise]. Thank you. Our next question comes from Danielle Antalffy from SVB Leerink. Your line is open.

Hey, good morning, guys. Thanks, so much for for taking my question I had two questions just why I'm, sorry to belabor, the Cobank point, Mike and tied but just curious about from a recovery perspective, I need I guess and I appreciate the commentary around the different phases, but logistically like how are you thinking about the ability for hot.

Good old to recover some of these procedures and do you expect any procedures to sort of be lost. Unfortunately, some of these patients might paresh or drop out of the system somehow how should we be thinking about that the safety you sure you see a little more color there and then one follow up on the.

Great acquisitions.

So neal thanks for the question on the recovery Logistically, we think it's going to be different around the country and so that's why we're managing and watching and have access to all the patients.

In the different parts of both you know Europe, Germany, and the U.S. and less of an impact in Japan relative to what happens with the delay. Unfortunately, the you know these patients some of them.

May not have made it through this co vaid crisis. However, there was going to be a large population of people now that our sicker and worse off a there is going to be.

Some carry forward for those patients that likely need some type of support and we also know that a in some cases, they're trying to go with the least invasive approach meaning that not.

Patients that may have in the past Scott have gotten open heart surgery cabbage may opt for something less invasive.

That will allow them to go in and out of the hospital within a day or two so those are the trends were watching a and I do think that you know heart failure.

Coronary disease was already the number one killer Ur Cobot 19 will have a negative impact overall because it is it attacks the lungs, but also those that get really SEC it impacts them.

And we likely will see market itis and cardium opposite the increase overtime as well.

Okay. Thanks, and then just really quickly on breed I mean that acquisition makes a ton a sense knee. Congrats on that I'm, just curious about how that could position you from that sales perspective, I mean is there an opportunity to I don't know with bundling is right, where it but sort of drive sales synergies I mean, there's a lot of centers you know the ones with the <unk>.

Ha presentations that her for X. now. So you know is there an opportunity for you guys to leverage and and get into those centers in a bigger way with the impella as well. Thanks so much.

So to be clear the leaders in this space circulatory support a and then those that have published most of the data our existing customers. There certainly are some people that are that that's still use balloon pumps and a I'd I'd qualify the the sites that produce the paper our balloon pump users and.

Big Ecmo users. However, the technology for Ecmo has an absolute role for oxygenation and yes. We believe there is great synergy not just in the distribution and in our organization to collect the data, but also in approving outcomes. It's a it's one thing to have somebody survive. It's another thing to haven't survive and do you just charged home with there.

Native heart and the optimization and the information that we have learned with Impella itself, we're really allow us to even leapfrog into acapella I remember every time, we leapfrog this technology with a new breakthrough we file more IP, which currently stands at 850 patents and over 700 pending so we will.

Continue to innovate in this space and you'll likely see us transform that that treatment to make it easier to improve survival, but also maximize an optimized native heart recovery.

Thank you for months.

Thank you. Our next question comes from Matthew O'brien from Piper Sandler Your line is open.

Good morning, Thanks for taking my questions Mike.

Our point about Dallas folks coming in right now because of fear a co bid we've been hearing a lot about that as well you know more more structural damage is gonna be cause as a result of bits to these patients. So.

Two questions one here when do you think the patients will start presenting.

The second half of this year and when they do present, given all the damage there, causing to their heart are they going to be more complicated patients to treat so you're going to see more either use at CP.

I've been trick EULAR five five you know how do we think about potentially.

Addressing this this patient population that's coming in with more damage to there to their heart muscle.

So Matt that is the the theory, we believe that will play out it's unfortunate for many patient that it patients that that's going to happen.

One of the great things about having impella connect having the largest field distribution team and also having impella connect ramping up is that we have really great visibility to every hospital every physician and we already have a network with the call center. So we know when patients are getting supported if you're in at Pelican.

Correct.

Site your it the patient goes on its in the cloud we know about it and we're really going to be able to customize and focus on the types of patients that are out there.

Yes, they're going to be sicker, and more complicated and as I said, we've already seen the impact a little bit of some sequential growth with the the announcements that elective procedures are opening back up as well as the media up approach that the CV cardiovascular societies have taken recently so we.

We want to be there to help our patients, but we only want to help patients at its appropriate and that's why when we do the co bid 19 calls on Fridays, we really zero in on the areas that we can help and all of the patients that we've seen so far have benefited from either the impella RP impella CP or the impact.

The 5.5, and so we're excited to have the opportunity to step in here with this crisis, but we also know that Theres. Some tough times ahead and is going to be a lot more sick people with heart failure.

Okay. That's helpful. And then expandable seat commentary I thought was really positive.

Can you talk about how the interaction with FDA has gone you feel really comfortable with.

The Miss in timing and potential approval and then any sense for.

When you may get the CP.

It makes it submit for CP and then again you know bundled within that I think it does a fair number of doctors that are waiting for that specifically can you kind of trying to quantify some of the conversations you've had over the years as far as what that may due to the business as you get those products later this year and into next year.

Sure. So we feel a blessed that we have the ability to have so much innovation and have the balance sheet to continue to move forward.

If you think about our plan of what we're already doing this year, we're going to accelerated so if we thought maybe impella connect would take three years, we're going to try to get it all done this year and we're staying on track with all of our new products and submissions. So I do want to complement the FDA has a little company, we probably have a ton of submissions in there for both new products.

Next our new studies are post approval studies and they've been.

Seamless and efficient and they've done reviews with us online and in real time, and so we feel very good where we are the Spanish will she is remember we've already done a 16 plus patients and we feel great about it. The submission is going to go in for five 10-K in Q2 for two five that's a 90 day submission that Max and will follow with shortly.

After with a for the CP for the easy pay or we are going to plan. It's the submission winning yesterday. So we'll be doing patients in the U.S. and the early feasibility study for high risk PCI.

And we're excited and hope to have that by the.

By the end of this summer or the beginning of the second half and that's another breakthrough technology, that's nine French three plus leaders, there's nothing like it but the intent for all of these technologies is that we'll be able to close the they the femoral whole with a nine French closure device and that's a game changer, and that's really going to help us with our training data in time.

Got it thank you.

Thanks, Matt.

Thank you.

Next question comes from David Lewis from Morgan Stanley. Your line is open.

Hi, Good morning. This is calvin on behalf of David.

Two quick ones from me can you. Please just provides more detail on the methodology. They used to quantify the 17 million cobot impact for the quarter was this an estimate based on the run rate of the first two and half month, and then applying that run rates in the quarter.

Or is that Jim geography based approach as well any color you can talk about there would be helpful and I have a quick follow up.

Good. Thanks, a question Kevin So yes, we did as we just took the patient run rate through may 14th. So the first two weeks of of I'm, sorry March 14th and we just kind of extrapolated that up for the rest of the quarter and a set of.

Those the performance we saw in the first two weeks of March continued we would have seen X amount from a patient.

Perspective, and then averaged.

Used an average selling price to come up with that $17 million, we use that same methodology here in the U.S. as well as over in Europe.

Understood.

And second question is do you intend to run clinical trials around the acapella therapy in the future and can you comment on the strategic trajectory for that therapy gone for thank you.

Oh sure Calvin the or in the press release, we did last night, we actually put three studies in publication that already in process. The next phase of this will really be starting to integrate the wave forms things. We can do with smart assist where you can time the impella.

You can look at the way foreign predict Recoverability and you can also match it with the oxygenation needs of the patient. So one example of what were what we're already doing with our AI for smartest says.

As we look at wave forms and we can determine whether or not we can predict right heart failure or are we look at wave forms for the last five to 10 minutes on a patient and we can predict the next five or 10 minutes of what's what's going to happen to the patients hemodynamics, which is critical if you're doing a high risk PCI and you're thinking about ex planning the device incentives.

To that patient with ice you or if you're just treating a patient in the ice you and you want to recover them so to be a lot more that can come up but again, the impella technology combined with Ecmo gives a whole new capability in treating patients out before you really didnt have smart devices, and you really weren't able to.

Evaluate what's happening with the myocardium for the patient in the I see you.

Thank you.

Well take our next question from Chris Cooley from Stephens. Your line is open.

Good morning, Thanks for taking the questions.

Good question, Todd just wanted to congratulate you guys on the.

Transaction.

No we will probably hear more about this at the upcoming Investor day, but.

Appreciate it if you could maybe elaborate a little bit more here.

Regarding your views maybe competitively on low flow more specifically below two leaders.

Just when we think about low in general in the complications associated with it.

How you potentially see the breeds device, obviously, you have a favorable view of it there, but how you see that versus other.

Competing technologies and more specifically from the low flow versus high slow right, but I've got a follow up.

Chris can you just clarify the low flow comment what specifically referring to.

So just a the flow rates are basically so so two leaders in the.

So just to clarify make sure I understand so the ecmo flow. If you do smaller canyon and you do it through the peripheral you can get a limitation that for some of these you'll see that its two two and a half.

[noise], you'll also see the trend at many of these centers has been to go smaller smaller candela with less flow with the thought process. They could get better outcomes, because you weren't completely overloading. The heart right you prefer ecmo per fuses a body at the expense of the heart the devices can run up to five leaders plus.

Ken the breed, but if you do that for too long, you're essentially going to you're going to send overstressed and overwork, the native heart, which is going to cause a larger infarct and so what you'd end up with in some cases the patient that has survived but now has to go onto a transplant and what are what our focus is and this technology is really so.

Simplifying the set up providing a smaller compact all in one device that will make it easier to ambulate, a patient and and plan out a strategy, where your weaning off ecmo and you're winning off impella together, so you're treating not just the body, but the heart and with the ultimate goal to recover so what you'll see more.

This does the details on this dr. bark breadth of is a pioneer in this space. This has been his life's work.

I've worked with them for over eight years and we've invested in this type of platform and technology now for for the last two years. So we've been very focused on adding this to our portfolio.

This process started two years ago and as I stated, we already had plans to do this and feel that now is the best time to have ecmo directly in our portfolio, especially with the increase in these respiratory acute failures.

Sure. So just lastly from me and also it's begun challenging.

So at least and looking ahead, but when we think about three phases red yellow and green.

When we think about the yellow phase am I correct to assume that as you're exiting the yellow phase you're seeing positive volume growth.

Is this just trying to want to make sure I kind of understand the parameters around.

The transition from yellow green is that a going flat.

So just trying to get a better field or.

Some additional sites. Thank you.

Sure Chris that's that's a great question because.

We're talking about sequential growth from March and April at some point that will start to crossover where you're looking at positive growth year over year and so that's that's a great question, where it's too soon to tell you that specific right now for Q1, it's really on sequential growth over the last month over the last week.

But we do expect when we get back to the second half to be net positive. That's what we would consider to be green, but again were similar to all the other companies that are out there.

That are waiting to see how the hospitals respond we do feel that our patients are sick or our elective cases are truly not elective like having cosmetic surgery or knees, there's still having heart failure. Many of them are still being admitted to the hospital acute on chronic and we do expect unfortunately for many people.

Coronary heart disease is going to grow and we think that with Covance 19, it's going to grow even more and so it's our job to be prepared as it ramps back up and we get into the positive, but what you'll see as we go along annual and you'll see is quarters, we'll give you full transparency to that number just like we did today and we'll give you full transparency throughout the year.

Thank you.

Thank you. Our next question comes from Jason Bedford from Raymond James Your line is open.

Good morning, I hope everyone is safe just a couple quick questions here.

The down 45% from mid March through April is that a worldwide number or was that in reference to the U.S. If it is a worldwide can you just talked about what you're seeing in the U.S. If it is different.

Jason It's good question I would say the 45% to 50% for halfway through March through April was a worldwide number.

As you can imagine we were seeing most of that impact and I would say the U.S. as wells in Europe.

Although we did start seeing a little bit more softness in Japan, but it's predominantly a Europe in us number.

Okay.

And just only the international business.

Growth slowed a bit and I fully understand that the coal that dynamic, but I think you mentioned an impact in Germany from the publications that doesn't feel like that was an issue last quarter. So can you just talking about what you're doing in Germany, maybe to combat the negative messaging from those publications.

Jay said it was essentially the same approach in Germany, and I think we did see a benefit as well just you know.

Education helps clarify any of the misperceptions and we're we have a very good German physician based and we continue to same actions that we didn't the U.S.

Alright, thank you.

Thank you and that does conclude the question and answer session for today's conference I now turn the conference back over to Mike for any closing remarks.

Thank you everyone for taking the time today and.

We were happy to follow up with any.

Questions asked for more detail be safe and have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program you may all disconnect everyone have a wonderful day.

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