Q1 2021 ABIOMED Inc Earnings Call
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Ladies and gentlemen, please stand by your conference call will begin momentarily. Thank you for your patience simply standby.
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[music], ladies and gentlemen, thank you for standing by and welcome to <unk>.
Well, Matt first quarter 2021 earnings conference call.
Hi, all participants' lines are in listen only mode.
After the speakers presentation, there will be a question and answer session to ask the question. During the session you need to press Star then one of your telephone.
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I'd now like to hand, the conference over to your speakers today Mr. Todd truck, Sir you may begin.
Thanks Crystal.
Good morning, and welcome to our image first quarter fiscal year 21 earnings conference call.
This is taught trap, vice President and Chief Financial Officer, and I'm here with Mike Minogue, Abby image, Chairman, President and Chief Executive Officer.
The format for todays call will be as follows.
First Mike will discuss the first quarter business and operational highlights.
And then I will review, our financial results, which were outlined in today's press release.
After that we will open the call to your questions.
Before we begin I'd like to remind everyone that today's call includes forward looking statements.
The company cautions investors that any forward looking statements involves risks and uncertainties and are not guaranteed in the future.
Actual results may differ materially due to a variety of factors identified in our earnings press release and our most recent 10-K in 10-Q filed with the FCC.
We do not undertake any obligation to update forward looking statements.
With that let me turn the call over to Avids, Chairman, President and Chief Executive Officer, Mike Minogue.
Thanks, Todd and good morning, everyone.
The cold in 19 pandemic has sharpened our sense of responsibility and commitment to patients and our communities Weve had to work harder and smarter. During this health crisis, and I'm grateful and impressed by the way in which our employees and customers have risen.
And given their best to meet these unprecedented challenges.
During Q1, we prioritize keeping our employee safe supporting our patience and manufacturing or lifesaving heart pumps, while investing in innovation.
Corona virus has brought changes to our operations, but our focus and the core of what we do remains the same improving outcomes for our patients with innovation and strong execution.
At Abbey amid our four principles operating procedures and patients first culture enable us to lead manage adapt and execute especially in challenging times, we achieved our Q1 goals, including monthly sequential growth regulatory milestones.
And advanced our innovation in education.
Our disciplined execution in Q1 delivered one of our most productive quarters in my 16 year tenure with the company.
Despite the impact of the pandemic on our commercial organization in Q1 I'd be met delivered 165 million in revenue down 21% year over year within the quarter. We achieved monthly sequential growth in April may and June.
And 4% year over year growth in revenue in June overall.
In June patients in revenue increased year over year in the U.S., Europe, and Japan as countries began to reopen and hospital restrictions were east on high risk urgent and emergent patients.
I'd be a mad remained a productive and relevant in the field by supporting cases and actively educating physicians through video conferences and broadcasting live cases with expert panels, we successfully controlled costs and expenses driving a solid 21% operating margin walk into.
When you went to invest 26 million in research and innovation.
Our balance sheet remains robust with nearly 600 million in cash and zero debt and our patent portfolio. Now contains 884 patents and 759 patents pending.
For today's call I will cover the transition from our Q1 Red phase two our Q2 yellow phase and our transformation into Abby amid chewed auto in fiscal 21.
We are investing in and executing on our plan for innovation driving smaller smarter more connected products, along with strengthening our training education and clinical evidence.
As we discussed on our last earnings call for the fiscal year, we designated a three phase red yellow Green Plains.
Challenging realities of the Cove at 19 environment, we called Q1 Red.
Because.
The broad state of restrictions on elective cases, and limited access to most hospitals, along with limitations on travel in person meetings and normal headquarters operations.
In Q1, we focused on completing the smartest says console upgrades and accelerating the rollout of Impella connect.
Both technologies help treatment ease of use and potentially improve outcomes.
We now have 1025 sites with smartest says and 257 U.S. sites online within pellet connect more than doubling the number of connected accounts since March.
Additionally, 402 sites already have the hardware on the console and we only need hospital Wi Fi permission to activate the Impella connect account.
And pellet connect allows abbey met personnel to monitor the impella console in the cloud and interact with the medical providers remotely on topics, such as hemodynamics alarm management and winning capabilities.
Our transition to Abbvie med to Dido encompasses online everything are moving a large portion of business activities to an online connected format that includes management reviews customer service and virtual training and education for customers and employees.
An example of having met you'd auto execution in Q1 was our team's ability to stay connected with doctors and customers throughout the pandemic, providing education and training virtually.
Within the quarter, we reached roughly 950 doctors through online professional education and training.
Additionally, on a weekly basis, we connected with anywhere from 60 to 150, plus cardiologists and cardiac surgeons to identify lessons learned in treating patients with cardiogenic shock Meyer could itis covert 19 and organ failure.
We've been reviewing and collecting specific case studies on Impella and Ecmo support for patients with and without Cobot 19, as a result of our ability to adapt and track data in our clinical databases, we were able to receive sta emergency use authorization for <unk>.
Pella this week, which further validates the unloading benefit of Impella with Ecmo support for patients in shock requiring oxygenation.
Another important to Dido milestone was the launch of camp PCI, our largest training and education initiative in company history, we recruited and his team faculty of physicians launched the cutting edge platform and held the successful virtual users meeting on June 5th attended.
By physicians from the United States, and Europe can't PCIA Leverages advanced digital content.
Such as live virtual weekly cases, and Proctor shifts from world renowned interventional cardiologists.
We remain focused on establishing can't PCI and the user group as the best online interactive education and training resource in cardiology.
Moving onto product pipeline in May we shifted to the full market release of Impella 5.5, with smartest says and our expanded surgical organizations.
At the end of the quarter. The Impella five five was in 86, U.S. sites and more than half how online within pellet connect.
We will continue to launch this 5.5 product with the goal of nearly 100% other consoles on impella by the year end.
Clinical data on the first 55 patients treated with the Impella five five with smartest as published in the July edition of the American Society of artificial internal organs or Xyo found 84% of patient survive to excellent with 76% of survivors, having native heart recovery, which is impressive for crop.
Cart failure patients.
And it's exciting to see real world data, demonstrating improved survival rates and the benefit of 5.5 unloading for acutely Decompensated heart failure patients in cardiogenic shock.
Now turning to the regulatory progress on May 29 to received FDA emergency use authorization for Impella RP to treat Kobin 19 patients with right heart failure from pulmonary embolism.
Since the onset of the pandemic the Impella RP has become a therapeutic choice for clinicians treating certain covert 19 patients suffering right heart failure.
This you a further validates the value of this life saving products for those patients.
On May 30, it we received FDA approval for the Impella Sep early feasibility study in the U.S. The prospective multi center non randomized early feasibility study will allow abbvie amid the study investigators and the FDA to test the device in the U.S. and assess safety.
Realty in high risk PCI patients, we look forward to beginning enrollment later this calendar year.
Moving onto Q2, we have transitioned to our yellow phase and our manufacturing facilities and Aachen, Germany, and Danvers, Massachusetts are moving back to full production.
During this phase we've begun to see the return of cardiogenic shock protocols and protected PCI procedures in most hospitals and geographies.
With that said, we have seen a resurgence in cobot cases in certain areas across the globe and in the U.S., which may impact patient access and treatment.
Overall, we believe hospitals are better prepare to handle the resurgence of cobot 19 patients currently due to the availability of testing and more preventative and safety measures in place.
Versus the peak in April.
In addition, physician societies hospitals and government agencies are communicating and publishing guidelines on the management of patients with cardiovascular risk factors.
These heart failure patients with or without Covidien 19 are essential.
Hi, risk emergent and at risk of death, if not treated in a timely manager manner.
Extensive guidelines and position statements have been published by Us and European societies, as well as CMS and other government agencies around the globe.
For example, a paper recently published in Jack summarizes guidance from 15, North American cardiovascular societies on the safe reintroduction of cardiovascular services during the Covance 19 pandemic.
As a result hospital systems are providing more timely and improve care for high risk emergency cardiovascular heart failure patients.
Adding that we will continue to provide 24 by seven support onsite oncall and online while working to improve outcomes for the growing epidemic and increasing mortality of heart failure from coronary artery disease obesity type two diabetes.
Market Itis and now Cobot 19.
The U.S. population 65, plus years of age is increasing 44% by 2030 and per at Jama study mortality is also increasing for both the 65 plus and the 45 to 65 year old populations no other company in.
Med Tech is focused on the science and therapy of unloading the heart and recovering the myocardium.
With our brief acquisition, we are now uniquely positioned to address in the future respiratory failure and combination heart and lung therapy with that pella as well.
I would like to share story about one of our recent patients Devon Smith, a 42 year old warehouse worker from Pennsylvania, He began experiencing flu like symptoms muscle legs and difficulty breathing.
Devon was transported by ambulance to Mercy Fitzgerald Hospital in Derby, PA, where he was diagnosed with Covance 19, multi organ failure severe mayan crude itis and respiratory failure.
With his ejection fraction dangerously low at 5% interventional cardiologist Dr., John Finley inserted the Impella CP to allow devins heart to rest and recover physicians also played Venus arterial or V.A. ecmo to combat the respiratory effects of Covidien.
Teen.
Shortly after Devon was transport transferred to the hospital of the University of Pennsylvania in Philadelphia.
After four days on him tell us CP and Ecmo support called Acapella Devins heart showed dramatic improvement and the Impella and Ecmo devices were weekend and ex planted.
Devon returned home after three weeks in the hospital with his native heart functioning normally at 60% to 65% Yep.
He is now back at work and looks forward to spending more time with family and working on his car.
This remarkable story represent great care.
Our lives saved and one of the most cost effective treatments in healthcare because it eliminates some of the most expensive and invasive surgeries costing over half a million dollars in hospital charges within six months.
These lower costs with quality of life helped both the patient and the insurance provider, which was Bluecross blueshield.
Now looking towards the remainder of fiscal 21.
We are focused on our goals as we rebuild Abby med Twod auto.
We continue to invest and advanced pipeline technologies, including the XR sheath, Impella CP Impella connect Impella BTR and new AI algorithms, we remain on track to bring the XR sheath, an expandable and recordable sheath that allows for a nine French closure.
Nice to the market with Impella 2.5 through a limited market release in our fiscal Q3.
Our brief Ecmo technology remains on track for a five 10-K clearance by the end of the fiscal year.
We continue to drive and accelerated rollout of Impella connect and recently received FDA approval for data streaming from the Impella connect console, which means console data can be streamed live via Impella connect to a HIPPA compliant secure server, where am I will provide predictive clinical information to physicians.
In the future.
Turning to clinical data, we've began reenrolling patients in our STEMI DTC randomized controlled trial in July.
We have recently enrolled five patients and reactivated five sites totaling 21 patients at 13 hospitals to date, we continued to advance the protect for RCT study and physician recruitment for the steering Committee has been completed.
In the fall, we're planning to release and publish the final data from protect three which will total over 1000 patients. The favorable interim report on 898 patients was presented at late breaking science at TCT in September 2019 last year.
Protect three is the ongoing prospective single arm Sta post approval study for the PMA approval of Impella 2.5, and Impella CP in high risk PCI.
The protect series of studies now represents the largest and most comprehensive study of approximately 5100 patients treated for high risk PCI with clinical data reviewed by the FDA from years 2006 to present.
Overall, we expect to have multiple meaningful publications this fiscal year.
Before I conclude I wanted to highlight and recognize the positive real world interim data on 819 Japanese patients from a multicenter prospective study conducted by the council for the clinical use of venture will assist device related academic societies.
And the PMTA in Japan.
The study conducted at 109 hospitals with oversight by 10 Japanese professional societies found that the use of Impella was associated with a 77% survival rate at 30 days in am I cardiogenic shock patients.
Other findings from this study included that the Impella therapy is highly effective treatment for Meyer could itis within 88% survival rate at 30 days.
The studies findings about the use of best practices are consistent with other published an investigator led studies such as the National Cardiogenic shock initiatives study and the Inova shock study that have demonstrated significant increases in survival with the use of Impella best practice protocols compared to the history.
Oracle survival rate for cardiogenic shock at 50%.
In conclusion.
I'm proud of volume as execution delivering on our Q1 red phase commitments and maintaining our focus to recover hearts and save lives.
We support each other our customers and our patience, we achieved sequential improvements in revenue and patients strengthen our clinical data and advanced our pipeline technology, our operational accomplishments in Q1 spanned the global organization and position our company for success for many years to come.
Now.
As we progress through the Q2 yellow phase, we know that we must remain focused and adapt to the ever changing environment with speed and execution.
Again, I would like to express my deepest appreciation for our teams across the company and for our customers I would also like to thank our shareholders for their continued support.
We will make fiscal 21, one of the most productive and transformative years for the company as we build Abby amid twod auto.
And continue to innovate products that are smaller smarter and more connected while we pursue studies for class one guidelines.
I will now turn the call over to Todd.
Thank you, Mike and thanks, everyone for joining the call today I Hope you in your families are staying safe.
During our last quarter call, we talked about the actions, we're taking to be prepared for the dynamics of the covert 19 environment.
Those preparations served us well and as Mike described we're navigating the near term challenges, while keeping a focus on the long term.
The negative effects of the pandemic, resulting in Q1 revenue of 165 million.
Down 21% versus prior year.
We felt the impact of the environment most intensely in April in terms of the decline in patients and revenue from the shelter in place restrictions and limitations on hospital procedures in most countries.
As Mike mentioned, we saw sequential improvement globally in May and June as restrictions were lifted and limitations east.
In the month of June specifically, we delivered year over year global revenue growth of 4%.
Driven by growth in both patients and revenue in the Us Europe and Japan.
We believe we experienced some positive lift in June as some patients who had deferred treatment in April and may begin to come back into the system.
For your reference we have provided a slide in our Investor packet slide three which breaks out reported revenue and patient performance by month and by geography.
In the US we delivered revenue of 135 million down 23% year over year, driven by a 22% decline inpatient utilization.
The northeast in California declined the most from an otherwise broad base decline in utilization in the quarter.
US revenue grew 3% in the month of June.
In the us at the end of June the Impella, two five and CP have reached 1451 sites.
The Impella five BOE has been placed and 653 sites in the RP is in 538 sites.
The Impella five five with smart assist is now in 86 sites.
We continue to receive very positive feedback from the surgeons on this innovative technology as well as positive real world clinical data on outcomes.
In the quarter to reorder rate was just shy of 100%.
Average combined inventory at the hospitals for the Impella two five and CP was approximately 4.6 units per site.
Basically in line with the inventory levels, we saw last quarter.
Outside the US revenue totaled 30 million down 6% on constant currency due to the negative impact of cobot 19 across all regions.
Our European revenue decreased 10% on constant currency, driven by weakness in Germany, France, and the Benelux region.
Specifically German revenue was down 9% in the quarter driven by softness in high risk PCI.
For the month of June revenue in Germany, and Europe was flat and up 5%, respectively on a year over year basis.
In Japan, we delivered 9 million in revenue in Q1 up 3% on constant currency due to the impact of cobot 19, and lower site openings.
This quarter, we opened 13, new sites nine fewer than a year ago.
As a reminder to investors we front loaded site openings in the first half of last year to allow the local team to focus on the post approval study any broader CP launch.
Similar to other regions, Japan did see a recovery within the quarter as revenue in the month of June increased 22% year over year.
Gross margin was 70.2% in the quarter compared to 82.1% in the prior year.
The year over year variance was primarily driven by lower production volume.
And some incremental costs to accelerate the impella connects rollout.
As Mike mentioned, one of the objective of the Q1 Red fees was to continue to invest in innovation, while being fiscally responsible.
In the first quarter R&D expense totaled 26 million, an increase of 11% versus prior year.
We invested in small board devices, specifically, the XR sheet and Sep.
And in clinical studies, including STEMI, DQ and protect for to support our long term sustainable growth.
SGN a expenses for the first quarter totaled 68 million.
Down 21% versus prior year.
The variance was driven by our emphasis on lower discretionary expenses.
Executive and management salary reductions reduced work schedules and lower stock based compensation in the quarter.
Q1, operating income was 34 million translating to an operating margin of 20.7% versus 29.2% in the prior year.
The year over year margin performance was primarily driven by lower volume and our ongoing growth investments. Despite the favorable impact of the cost actions we implemented.
GAAP net income for Q1, with 45 million or 98 cents per diluted share versus $1.93 cents in Q1 fiscal year 20.
The year over year performance was driven by lower volume a mark to market adjustment on our Shockwave investment in our tax rate.
In Q1, our reported tax rate was 27% versus 14% in the prior year.
Driven by lower excess tax benefits associated with equity compensation.
Our balance sheet remains very strong.
We generated 32 million of operating cash flow in the quarter and we ended June with a cash balance of nearly 600 million up 13% over last year with no debt.
Our cash balance declined versus fiscal year end due to the Breeze acquisition.
We continue to be disciplined and have the capital necessary to stay focused on innovation and the long term.
The covert pandemic is still very fluid and continues to evolve differently across geographies.
We believe we're likely to continue to experience variable impacts on our business based on some of the resurgence that is occurring in cities across the globe.
Given the uncertainty in the environment and consistent with our comments last quarter, we're not in position to provide full year guidance at this time.
However to provide transparency to our investors. During this period of coded resurgence, we will provide insight into our July preliminary results.
For the month of July we reported approximately 8% global revenue growth year over year potentially augmented by timing of Reorders favorable sales mix and foreign exchange.
However, us patient utilization for the month of July was down approximately 4% year over year, driven by a resurgence in covert cases across select areas, such as Florida, Texas and California.
Japan has also seen resurgent uncovered cases, which is impacting utilization, resulting in single digit patient growth for the month.
Absent has a benefit a page of visibility by hospital by physician and by indication through our on site on call and online tracking included in our Q database and Impella connect platform.
We will continue to monitor the fluid situation and will provide updates as necessary.
In conclusion, while Q1 was a challenging quarter, we're very pleased with our operational performance and our sequential improvement in both revenue and patients as we transition to the Q2 yellow phase.
We still face short term uncertainties, given the depth and unknown duration of the pandemic and we're focused on the actions we can take.
And what we can control.
We will continue to be agile, which allows us to adapt to next Q quickly and remain focused on our fiscal year 21 goals.
We are confident in our overall strategy in the significant opportunities ahead for Abbvie med.
With that operator, please now open the lines for questions.
Thank you.
Ladies and gentlemen, if you have a question at this time.
Our our by the number one team on your Touchstone telephone.
My question has been answered all your which are moving ourselves from the Q. Please press the pound key once again to ask the question. Please press Star then one now.
Hi, Sorry question comes from last standpoint from Jefferies. Your line open.
Hi, good morning.
One of the feedback store with.
Some some additional detail perhaps on June and July I'm curious if there's anything you can provide in terms of whether there was some deferral catch up that may be drew.
The better performance in June and then maybe as Youre getting into July that's more of a normalized demand is there any you can offer just in terms of the complexion that maybe patients coming back. They were previously not done and how that may be impacts the growth going forward.
Yeah Raj. So good question. So in terms of June obviously is part of it was driven from some of the what I'd say reorder rates that were a little bit lower and in April and May as hospitals kind of managed inventory. So we saw reorder rates fairly low in those months and there was a little bit of a little bit of a catch up I would say.
In the in the month of June.
With that said I mean, our patient growth in June was up 7% in the United States versus 3% from a revenue standpoint.
As I think about July couple of things I'd point out. It first it's one month right and I don't think you can translate to performance to the entire quarter as I mentioned, we had a really strong finish to June and some of those reorders did push into July.
One thing we are seeing as we're seeing a favorable sales mix.
As the two five is really being replaced by the CP in the five FFO is being replaced by the five five so we've seen some some benefits of higher average selling prices. There we saw a little bit more five five deals as well in the month of July and the FX rate to is is a little bit of I would say a little bit of a tailwind the euro rate was a bucket 18.
In July this year versus 112 last year. So there's there's a little bit of noise I would say in the month of July.
But overall, it's one month, we saw a solid long way to go and the only thing I'd point out about July in Q2 is we did have a really strong September and I just want to make sure people understand that.
We have some tough comps in the latter half a year september's growth rate was about 25% so.
Just I would say don't get ahead of us a little bit on the month of a month of July.
Understood and maybe just one last one in terms of the complexity of revenues. It looked like shock was still down maybe high teens.
PCR was down maybe twice that rate.
The other question has risen about white shock is not coming back why there is still such a falloff in that kind of very emergent kind of need to treat indications and to get off in terms of whether youre seeing any.
Any disparate kind of rebound in that versus PC eyes were going forward.
Yes, Raj I can tell you for the quarter high risk PCI was down 35% and shock was down 12%, but as you look as how it progressed through the quarter for the month of June actually.
Shock was up almost double digits and high risk PCI because it was it was basically flattish. So we definitely saw a stronger strong recovering both indications, but a little bit stronger on the shock side.
And an increase in are going to be.
Great Great I'll leave it there thank you.
Thanks Raj.
Thank you Sir our next question comes from Margaret Kayser from William Blair. Your line is open.
Okay offering and the question.
Just wanted to follow up again on July commentary.
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And.
Recently, who also saw some maybe delayed in July.
Suggest that maybe some of those were just truly delays and already getting rescheduled for the next couple of weeks. So I was curious if you guys are saying that as well or is it too quickly.
Smoking I want to make sure it clarify the question the.
Is it about a rebound in July of from some of the delays.
Yes, correct from a planning of rescheduling.
Sure. So obviously a few of our patients are getting CPR and in April when systems are really overwhelmed for example, in New York City and in Italy.
Basic treatment for cardiovascular diseases was was pretty much on hold Unfortunately, however, what we did see.
That's an even the government agencies like CMS are now putting out guidance documents, because cardiovascular patients that are high risk or urgent or emergent have high risk of death, if they're not treated in a timely manner. So they're doing a much better job and so we feel confident that the system won't get broken again or overwhelm.
And what we see is that as things progress.
Able to rebound are able to still treat those emergency patients because again they have an imminent risk in some cases, they have a higher risk of desk and some covid patients.
When they're in profound Oregon failure so.
That.
Trend, we've been seeing we're optimistic about it. However, there are some places that have been a little bit overwhelmed and the ICU, we're able to track that in those areas, where we don't get as much interaction into the hospital, having the impeller connect and having the teller sales or the the clinical team, they're calling in helping on cases is very productive as well.
Okay.
And then I wanted to clarify.
Thank you and reference are now and yellow.
What are the changes that you're making commercialized here on this.
Should we assume that there is a potential for growth or Thompson.
Splenda impacts I bet.
It's a great question and so as we look at the year.
<unk> total transparency to our investors. So you can see how we're managing and what we're seeing relative to both revenue in patients. The red phase was really driven by a bit of the unknown and and there was less preventative care. There was less documented guidelines and we think we manage through that pretty well and we really truly.
[noise] invested in the innovation things that we can control as we move to the yellow phase.
It has to do now with continuing to advance.
The the product innovation, the regulatory approvals ramping up again are clinical studies moving forward on lots of publications and managing not just covid logistics, but the anxieties and so the way we're doing that is.
Want to become experts at testing weather for the antibodies or for the active.
And the active case and so we're buying tests were performing tests, we have local accounts that we can send our people too we run drills once a week, where we do a covid marked drill where a person has identified to potentially have it.
They run through the process, we clean out their cubicle or the raw fish, we sterilize it and we ask them now to go and get tested not the.
Not that upper nasal tests, but some of these less invasive procedures that are lower nasal or saliva.
We just want people to get used to that process because I think the anxiety is tougher than logistics. We've only had 15 cases globally. We haven't had any patients that have had desk. Then we only had one hospitalized briefly but the person's doing fine now. So we again, we want to make sure that we manage everything here in the.
<unk>, we've never shut down in the office, but we had a skeleton crew for manufacturing logistics now we're moving back to full production and it's a bit business as usual from our customer education and training perspective, there used to now being on virtual calls.
We do weekly live cases, now so every Wednesday, we have alive case with.
From a hospital, where physician panel experts and people call in we recorded for people to watch. It later on camp PCI, but pretty much moved everything now into supporting virtual training virtual education for both our customers in our employees and we are confident that.
We have the right blend of what we can control what we can influence around outcomes and what we can endure and so we will continue to it.
Endure the Covid 19.
Again, our main focus is improving outcomes and growing patients in revenue year over year and cute too.
Great and if I can one last one just the new data in Japan, obviously tackler the growth and you guys saw on June with spectacular.
Notwithstanding any covitz, how should we think about progression there whether it's commercially of revenue oriented or maybe some societal responses. Thanks so much.
Japan interim data is very positive will we're going to finish out the final study, but that was presented by the chairman of Japanese committee on the eventual assist device usage.
We feel good that the Japanese physicians are implementing best practices.
Tend to show a lot of rigor and discipline in their protocols.
With the exception of some of the flare ups in Japan, We again love. The fact that the primary focus with the Japanese physicians as native heart recovery and we're moving forward to get the impeller five five in Japan as soon as we can.
Thanks again.
Thank you.
Next question comes from Chris Pasquale from Guggenheim. Your line is open.
Thanks, a couple questions first I wanted to circle back on the June July commentary in July specifically.
Between the revenue and patient street is wider than <unk>, Tennessee from you guys.
Give us a bit better sense for the impact your seeing for mix and then the ketchup and Reorders makes sense, but you really didn't report a decrease in inventory levels or reorder rates in <unk>. So how big of a catch up do you really need to see their why didn't we see more of a dip in the quarter.
Yeah. So Chris is good question, the reorder right actually for for the month of for the quarter was about 98, and so we've been typically a little over one 101, one or two in the past several corner. So the reorder it was a little bit slow and again as you look at how at Progressive a quarter I mean April April and May.
May the reorder rates were down in the low nineties and then there was a little bit of of ketchup in June but from an overall quarter perspective. It was still below 100%. So when I look at July's performance.
Let's just take the U S. For example, we are seeing about I would say two to three probably three plus points just from a stronger reorder point again, a lot of the joke June was really strong and so at the end of June some of those Reorders did pushing to July and I would say that's probably driving.
Three points of growth in the month of July.
The other big point as I mentioned is the mix on our business and so if you think about C. P. C. P was down 18% in the first quarter.
Two five was down over 60% and so we see higher average selling price on the CP versus 25, So we're seeing some mix there as well as the acceleration of five five versus are five O.
And that's that's driving.
Some shakes too so I would say is from a sales makes perspective, it's probably 253 points as well and the month of.
July and the other thing too is we're seeing is because of the emergency use authorization that came out in early June we are seeing some nice.
Pick up and Arpey RP actually has a higher average selling price and actually has some nice growth in the month of June and as we head into July.
That's helpful. I appreciate all those detail there.
And then Mike it's basically sounds like we've transition directly to the Green phase that you laid out in May just based on where the business set at the end of the quarter you still talking about yellow in <unk>. So what elements of that Green phase are you still not saying.
Chris the perspective, we have on yellow is that we're not yet green, but we're not in the Red faced and for example, we do have territories in regions that are up in positive we are launching the new products.
And we are back in the office, but we're not at 100% in both facilities, while we ramp up again manufacturing to full production that.
That being said you will have and we do have territories that are moving a bit back into the red relative to some of the access into the hospitals.
And you have some areas that are moving forward into green, we're very pleased as I announced we're back in July re enrolling again and reactivated sites for the <unk> studies. So that's a positive.
But we're not every center yet so until we get to every center until we get to the.
<unk> no longer seeing some of the flare up so the ICU constraints.
We're not in the Green phase, but we are able to look at territories and say by the end of this quarter, we will have territories that or green and we will have certain territories that may be flipped back to read and hopefully get out of it as fast as we can we're also please that the societies in.
The government agencies, I've really stressed the importance to treat high risk essential emergency patients.
Most of our patients have an imminent risk of depth, if they're not treated and therefore, they're putting in the processes and the protocols into the hospitals.
And many of the hospitals give us access, but even if we don't have direct access into the room, we do with our call Center and again with impeller connect we're managing and monitoring these patients real time in the cloud.
Thanks.
Thank you our next question I'm from Danielle and coffee from SBB Leerink, you're lying open.
Good morning, everyone. Thank you so much for for taking that question.
Just a question on the Covid impact in the quarter more specifically.
Positive sales impact with the EUA for RPI appreciate the less.
Did not calm until this month or very recently, so no impact there any any way to quantify sort of how much a sales with tied Nicole did Nissan.
That's a good question.
From what we track we have over 400 cove, it or suspected covid patients.
In many ways, you're reading about things around Oregon failure soccer market <unk>.
That we've been talking about for 10 years and those are indications we're already approved by the FTA. So I think Danielle the visibility of what's happening where the lungs progress to the heart and it causes kidney failure the whole element of empower plus with <unk> gives us the ability to.
Break that chain and still drive not just survival, but native heart recovery the story that we highlighted.
Evan is truly remarkable and just to point out again to everyone is his his native hard function now is back to normal and so that's the ultimate goal. The ultimate goal should not be survival and to have to go on to other surgeries or a transplant and I think that what cove. It has done as it has increased Oregon failures has increased the need for.
<unk> failure, so that should drive in increase in that color, but it's also allowed for people to understand the protocols and looking for what's the cause of death in the ultimate cause of death is either respiratory failure or heart pump failure and so for both of those technologies, that's where where uniquely position now to provide a salute.
<unk> and again with the goal of native heart recovery.
Alright can I get the point is it doesn't matter what causes issued whether it's covered or not and teller or at telehealth. Okay. So so that makes sense.
The other.
One point on that if you look at diabetes and obesity.
That's growing to the point that that could impact 10% of the population and obesity in type two diabetes causes tight causes heart attacks coronary heart disease and all of these other challenges that patients half so unfortunately.
Heart failure, just going to continue to grow at a faster pace now with Covid and the population of 65 is growing 44 by 4%, but also that population between 45 65 is also showing an increased mortality rate from heart failure.
Okay. Thank you for that and you sort of alluded to this.
And the prepared remarks, but the ZIP code that dynamic actually motivate hospitals and figure way to establish and enforced protocols for Cardiogenics, Jack and maybe even high risk PPI.
Now.
Environment hospitals are crunch for time and money, so perhaps protocols increase efficiency. While also improving outcome is there any dynamic you're seeing there or my stretching too much to get that.
I think so I think that's.
We look at it is also why we're doing these weekly calls to constantly talk about press best practices, what do we learning about Covid. What are we learning about the treatment you have cove. It on the left side with the heart and the lungs, but you also have.
[noise], covid, causing inflammation, which increases the clotting risk and so if a patient gets a clot in their lungs or pulmonary embolism. What happens is the right ventricle gets overwhelm trying to pump across that extra resistance and that can cause right heart failure, so by putting in in Palo Arpey the pumpkin take over the the work at events.
It can reduce the auction demand for both right and buy subsequent left ventricles themselves and it allows us physicians to either do tpa to break up the cloth or do an aspiration device to suck. It out. So there's just lots of tools were enabling now but all education is helpful and that's why we're trying to do as much as we can through these versus.
Well calls and live cases.
Thanks, so much.
Okay. Thank you.
Our next question come from Matthew O'brien from Piper Sandler Your line is open.
Good morning, and thanks for taking the questions.
Not to keep dead horse here on July, but Todd you've got a lot a lot of data on the U S. Specifically in the patient.
Number in the quarter sorry in the month is likely going to get some attention. So what are you seeing between some of the breakout areas, Texas, Florida.
Arizona in terms of contraction and patients versus areas that are less affected so.
Cove it affected areas are they down 10%.
More than that in July in other areas there.
Five 6%, how do we think about that.
Yeah, I know, it's a great question, we do have I mean, obviously, we do track patients every day Bye hospital by physician and if you think about the hotspots in the United States, which were obviously, Florida, Texas, a little bit of Arizona and California.
Represents almost 30% of our volumes and for the month of July for example, Texas was down.
Close to 30% and we're seeing it seemed not not not as bad of declines in Florida.
In California, but still declines more than more than a 4%. So we are seeing an impact of covered reserved a resurgence in these areas, but one thing I would I would say.
Matt is that the fact of.
It's not like when we saw in New York, New York was overwhelmed New York was some would call broken and we saw for example.
April and New York, our patients were down 90%.
Bounce back in.
In June they were up 45%. So we know at the end of the day that these patients are sick, they're not elective and that obviously will see an impact for a month, but there will be there should be a bounce back based on what we saw in Q1.
Okay and that Texas example, you provided you didn't lose a bunch of and.
Customers or anything like that in Texas, because you're going to explain it it's really covid specific that's impacting.
It's basically cove, it related and it's not all of it.
Got it Okay. That's really helpful and then Mike you've been touching on this throughout the call I know you don't want to capitalize on a pandemic.
The technology has been underutilized and a lot of areas for a long time, what what kind of catalyst is going to provide again you talked about R. P a little bit of color.
Cardiomyopathy et cetera, what areas underlying here is this going to really catalyse going forward that.
May be difficult for investors to see at the moment.
I think the first.
Subtle point, Matt is.
High risk PCI.
Provides a minimally invasive procedure for a patient so as compared to cabbage are open heart surgery. It could be a preferred mode now for hybris patients because it's a shorter hospital stay the second component is.
These patients you want to get it done right protect the patient. So they don't have hospital longer hospital stay and you need to get complete revascularization in a single setting rather than staging patient. So I think we do see that in areas as.
As is Todd mentioned in June.
Ami's shock was was around 10% growth and hires PCI was flat so.
That was the opposite of what happened in April where everything was down but hydrospace hours down more so there's a certain resiliency in our technology, because even our high risk PCI patients aren't technically elective, it's not an orthopedic procedure and 40% of our high risk feast outpatients, our urgent so they're being admitted into the hospital with chest pain and need to.
Trade it for the shock side I, just think that more education, that's out there on what causes a lack of oxygenation what happens when the heart goes into cardiogenic shock and what's the impact of the kidneys and so what we've been talking about for many years.
Is element that unloading itself creates a positive cascade at rest of the myocardium. It helps it to recover it's actually in our FDA label that it's a therapy to allow for native heart recovery.
We have also been publishing papers and talking about the benefits unloading. The heart has a positive impact on the kidney themselves lousy kidneys to turn back on make your own and get the impurities out of the body. That's in the blood. So there's just.
A whole component now of of evolving that and now adding in the need for oxygenation least some more act pella discussions because the end goal for all these patients has got to be survival with native heart recovery.
And.
The news, there's constant new vaccines and other drugs and there was a lot of press on ventilators.
Being used for the right reasons, but ultimately what we're trying to do is get patients home with their own heart.
Very helpful. Thank you.
Thank you. Our next question comes from Jason Bedford from Raymond Jane You're lying is open.
Good morning, just just a few questions here.
There's been a lot of discussion around revenue growth versus patient growth, excluding the NSP uplift tied to moving from seed or 25 million CP five O. Five five can we assume that pricing and the quarter was generally stable.
Yeah. So so we just to clarify.
Provided in our third slide an investor Dang.
Week broke out you'll see on that bottom. There's two boxes. So you've got April may and June and April may and June had sequential lift and then we also broke out to provide complete transparency for June let everyone see the patient growth in the revenue growth. So as you can see the U S patient growth with 7%.
Mixes changing but the asps for their products are the same so that's.
Just have your question as we move forward into July when we see an area down there is a direct correlation with some of the spike in covid. So outside of the Spike in covered which we think we see a rebound now as we've seen in New York and some of these other areas, including in Italy, as we feel confident moving forward.
That that we have a good balance now between patients and revenue growth and we have a playbook in order to go into these territories that might have a flare up in covid to allow for these cardiovascular these high risk essential patients to be treated and so that mix is not necessarily driven by purely price.
It's being driven by some of the Covid restrictions and then the last is we appreciate it it's a challenging time to give guidance. So we're going to <unk>, providing all these details. So that you can see how we're managing it and remember that when we say there is an impact in Texas, it's not all regions in Texas, It's not even every hospital because we.
The IQ database and the telesales, an appellate connect we're able to see it as it's happening real time in specific hospitals with specific physicians.
Okay.
Again as I look at.
The slide patient growth was up seven in the U S. Revenue growth was was up three implying some sort of price degradation I'm guessing that is not the case.
That is not the case, Jason that's not the case at all I mean this.
Month of.
[noise] of June it would've been the lower reorder rates and it would've been less deals that's really I mean, because that's the other day, it's 22%.
Patient utilization in 20, 21% growth. So it's very close and so there's a little bit of puts it takes but there's no degradation of price.
Okay, that's fair and that's what I suspected.
Wanted to ask about five five and I. Appreciate this is a difficult environment to gauge this but it's five five growing the market or do you see it is largely cannibalizing five five at this point or firewall at this point.
Both the 55 is a breakthrough product if you watch the Investor day, Dr. <unk> from Cleveland Clinic.
Talked about the ease of putting it in talked about the blood compatibility based on publications in the FDA testing parameters. We believe it's the most blood compatible hard pump ever made.
It really allows for higher flow.
Four four patients that have shock.
Including patients that are acutely the compensating.
That are more heart failure chronic patients.
Okay and like just.
Five five has been out in Germany.
Here's forget the exact approval timeline.
Can you just talk about the use of five five versus five O in Germany today.
So the.
Five O is still available, it's a lower price point and it has.
It's a little more difficult to place in Germany, we're working through reimbursement issues too as we go through the cycled it it's a bit of a higher price point in the same will be true in the U S, but both products.
Are naturally driving into the 55 market so the.
<unk> and the and the LD. That's the direct are you able to do both with a five five you can place it direct or you can place it with the chest open or you can place it through the axillary artery and so I think that's where they're market is going to go long term.
Okay. Thank you.
Thank you.
Question comes from David Louis for Morgan Stanley. Your line is open.
Hi, Thank you for taking the question. This is Calvin on for David just got one clarification on.
Until the license just curious.
The.
Growth with your quota Virginia in July.
Contribution.
Extra Sundays and it's still kind of an extra Sundays are their relative to last year.
And the same question for July and I, just have a quick power.
Yes.
Hi, Kelvin. This this is Todd so.
We have 30 <unk>. These in June this year versus last year, and that's how we look at the business alright. So we treat patients every day of the month, obviously, we had a few more work days this June versus last June.
And if you look at some of the patient volumes on the weekends versus weekdays there is a little bit of a difference there so that might have been maybe one point of growth, but we had the same opposite effect in the month of May so from a quarter standpoint at net so.
Got it understood.
And just a quick follow up on clinical trials and timing just have you guys said.
Those kind of estimated timing for.
Four and recover for enrollment completion and readouts. Thanks, so much.
We haven't given the specifics on completion, especially in the Covid times here. However, we have said that <unk>.
We anticipate doing or.
First patient at the end of our fiscal year, but we'll be obviously monitoring that with.
With the Covid experience around these research centers, we're very excited that <unk> study is up and running and as I said, we've had five patients enrolled.
In July and we're going to continue to focus on proper execution of both studies.
Great. Thank you.
Thank you.
And our next question comes from Chris Coulee from Steven Your line is open.
Good morning, Thanks for taking the questions maybe just a quick one is a follow up.
The last.
Questions.
Could you maybe.
Talk to some about what you can do to accelerate enrollment.
Let me think about to meet you to you on on the train the Investor Day, you mentioned some of the challenges associated with out here the coveted environment.
But.
<unk> and these rules of centers that you can further accelerate that enrollment and I'll just go in Osman followed mountains obsession.
You guys did a phenomenal amount of heavy lifting while also changing strategically I think pretty significantly during the fiscal <unk>.
When we think about.
2.0 now.
<unk> other opportunities to use.
<unk> like 10, others to further accelerate.
Hold on just to connect but also just the online education.
To further accelerated adoption kind of a community setting.
More specifically around protected PCI. Thanks.
So Chris thing. So the question I'll answer the second one first camp PCI is 100% focused on creating that network. The user group every Wednesday, we have live cases now from around the country and it's been.
[noise] helpful. I do think it creates awareness with the physicians that are calling in talking about how they treat these patients.
And we do expect it will drive protective PCI will drive some of the awareness of the treatment protocols and we're very excited because physicians now routinely log in calls.
They see this is the future they enjoy getting access to the world's experts and watching these cases, and we're very pleased and very excited and I think I'd be mad too Dato part of the big Game-changer for us as as physicians wanting to use this type of user network like can't PCI for you first question on <unk>.
There are things, we can do we're doing it but a lot has to do with just working with our physicians identifying the semi patients with the recent guidance documents that are out there I think there is a lot more visibility again to try to drive in <unk> patients to the hospitals and are physicians tend to be the thought leaders in the influential folks around the country.
Thank you.
Okay and can I interest.
And our next question comes from Marine Thiebaud from Pete <unk>. Your line is open.
Hi, Thanks for taking the question I'll ask just one here.
I'm curious what you're hearing from your hospital customers on patient willingness to come in points and given sort of the orange and an American nature of many of your procedure.
When do you think you might have worked here majority of that different patient.
We had from from April Thank you.
Whereas the good question and the answer is it's the yellow phase so in some areas. They are making progress the hospitals in the society has been successful getting people to understand the risk of staying at home with chest pain, we're having a heart attack.
And.
You have sites in areas that are positive and doing well and you have other sites, where there's more fear part of that it has to do with the regional nature and what's happening with the restrictions by the government.
But for the most part everybody knows now that the risk of staying at home with a heart attack is far greater than the risk of contracting Cove at 19, and I think as the logistics is worked through the next phase of this is people understanding the anxieties. We're very confident in are physicians in these hospitals.
That they are completely dedicated committed these patients and whether the patient has cove at 19 or not there's lots of guidelines and protocols now of how to treat these patients even with Cove at 19 that are having emergency cardiovascular issues.
Thank you.
Thanks for the question.
Thank you and that does conclude our question and answer for today's call and I'd like to turn the conference back over to Mike Minogue for any closing remarks.
Thank you everyone for your time today.
If you have any follow up questions feel free to reach out and have a great day.
Ladies and gentlemen, thank you for participating in today's call.
The programming email disconnect everyone have a wonderful day.
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