Q4 2021 ABIOMED Inc Earnings Call
[music].
Ladies and gentlemen, and thank you for standing by and welcome to the fourth quarter 2021 Abiel, Matt earnings Conference call. At this time all participant lines are in a listen only mode.
After the Speakers' presentation there'll be a question and answer session. The.
I ask the question during the session you would need the press Star then one on your telephone. Please be advised that today's conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like the hand the conference over to you Todd Trapp. Please go ahead.
Thanks sure good morning, and welcome to the Abiomed fourth quarter 'twenty One earnings Conference call. This is Todd Trapp, Vice President and Chief Financial Officer and.
And I'm here with Mike Minogue, Abiomed, Chairman, President and Chief Executive Officer.
The format for today's call will be as follows.
First Michael will discuss fourth 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 would like to remind everyone that today's call includes forward looking statements.
The company cautions investors that any forward looking statements involve risks and uncertainties and are not guaranteed in the future and.
Actual results may differ materially due to a variety of factors identified in our earnings press release, and our most recent 10-K and 10-Q filed with the SEC.
We do not undertake any obligations to update forward looking statements.
With that let me turn the call over the average chairman President and Chief Executive Officer, Mike Minogue.
Thanks, Todd and good morning, everyone.
Throughout the COVID-19 pandemic I B of Med has remained on course to advance our innovation and become the standard of care for circulatory support.
We adapted and executed while successfully transitioning from a red yellow and green phases, two abiomed chewed out of the Ciudadano marks our transformation into a smarter and more connected online medical device company with of COVID-19 playbook.
We conduct the onsite and online training and education and provide patient support with smart algorithms to track real world utilization in the cloud identify best practices and optimize patient care.
For the quarter I met him and delivered a company record of $241 million and revenue of 17% year over year with double digit growth and record revenue across the U S Europe and Japan.
Within the quarter, we saw monthly sequential improvement and both global revenue and patient utilization.
Q4 investments continued while achieving a 26% GAAP operating margin.
Applying our abiomed Ciudadano COVID-19 playbook.
And we definitively transitioned to the green phase validated with record number of patients supported and a quarter and a month and a week and end of day all in Q4.
Turning to the full fiscal year, Abiomed delivered 848 million and revenue up 1% year over year and 27% operating margin. Despite the COVID-19 pandemic.
We took a disciplined approach to the fiscal year to help us navigate the uncertain environment.
And achieve our tactical plan.
Over the past year, we endured the setbacks of COVID-19, and focused on keeping employees safe, making life saving heart pumps and supporting our hospitals and patients we control the expenses and invested in innovation, new clinical studies and expanded distribution.
While remaining fiscally responsible and our balance sheet strength, and two 848 million and cash, while maintaining and zero debt and acquiring and Ecmo platform.
In addition, our IP portfolio increased to 1150, Impella patents and 940 patents pending.
We achieved a significant number of regulatory approvals and established world class online training and education with camp PCI.
At Abiomed, our patient first mindset gives us purpose and courage and we always seek opportunities to lead manage adapt and execute.
For this fiscal year I would like to thank our employees and customers for their courage and dedication to patients and leadership throughout the pandemic, we exited the year slightly up in revenue profitable and stronger than ever before.
For today's call I will highlight our fiscal 'twenty, one innovation that will drive our success and momentum into our fiscal year 'twenty two goals and beyond.
And fiscal year 'twenty, one abiomed launched revolutionary innovation across multiple patient populations, starting with the accelerated rollout of Impella connect our remote monitoring capability, allowing us to go live at nearly 1000 hospitals and the U S.
Currently 70% of our patients are monitored in the cloud with Impella connect no other company and our space provides this level of 24 by seven on site on call and online support.
And this is particularly meaningful in the COVID-19 environment. We have also expanded our global footprint with Impella connect and 29 hospitals in Germany, and 49 hospitals in Japan.
Next the Impella five five with smart assist continues to deliver strong results within the quarter. Our U S. Surgical revenue grew 46% year over year as we expanded this device to 53 more sites totaling 211 sites for.
For the full fiscal year U S. Surgical revenue grew 44% year over year, driven by strength in patient utilization.
The Impella five five is a revolutionary product because it is because it is minimally invasive provides.
Provides forward flow and as a fully unloading heart pump designed for heart surgeons and it is inserted via the axillary artery or directly into the order and designed for longer duration support with the and patient ambulation.
The Impella five five has reported comparatively higher survival rates and native heart recovery for the acute lead the compensating heart failure patient population, representing an additional 100000 treatable U S patients.
Heart Surgeons are also enthusiastic about our BTR heart pump first in human experience expected in the fourth quarter of this fiscal year.
Turning to our Abiomed breathe Oxy one system, we have now treated 20 patients of data at several sites.
And March I visited our breed facility in Baltimore and met of breathe Ecmo patient on support at the nearby University of Maryland Medical Center.
The feedback from physicians on this innovative compact cardiopulmonary bypass system has been positive.
Customers highlight the ease of use with the simple intuitive interface and the light portable design, allowing for ambulation.
We will continue to innovate and planning to optimize this technology with smart at Capella software and connected cloud monitoring.
Moving on to our regulatory progress we.
We advanced our U S. FDA early feasibility study for the Impella ECP and <unk>.
True nine French heart pump as.
As a reminder, in early Q4, we received FDA approval for the expansion of the early feasibility study to 20 patients and have enrolled 10 patients to date.
The excitement for protect for is palpable and the heart failure of community and we recently announced our first patient enrolled at Ascension Saint John Hospital in Detroit.
It is important to note that protect for was designed by the leaders and best clinical trials in the field of cardiovascular medicine.
It is an on label prospective multicenter randomized controlled trial and is designed to provide the level of clinical evidence needed to achieve a global class one guideline recommendation for Impella and high risk PCI and the future.
The intent of protect for RCT is to leverage and validate the best practices that we've learned over the past 10 years and the protect series and see that studies that led to the exclusive FDA PMA approval of Impella for high risk PCI.
We believe the heart failure of communities engagement will propel the protect for study to be of landmark trial for high risk PCI overall as the new treatment alternative.
In the past we have defined our current addressable market for high risk PCI is 121000 and U S patients.
As a result of the protect for study we are directly investing this year in outreach referral programs that we expect will better identify the undertreated population of an additional 319000 high risk PCI patients that are turned down for surgery and not referred for for.
Check the PCI treatment due to not being diagnosed or tested for coronary artery disease since.
Since the protect for study is on label and spans the heart team. We now estimate our new U S addressable patient population for high risk PCI to be 440000 patients.
For context 15 million people in the U S of coronary artery disease, and heart failure and it causes of approximately 1 million deaths per year corn.
Coronary artery disease and heart failure remains the leading cause of death overall.
And is the number one cause of death for people with type two diabetes.
While we will not complete the study in fiscal year 'twenty. Two we now have line of sight and a path forward to solidify the new standard of care for high risk PCI with the goal of complete revascularization and improvement and patient quality of life and ejection fraction.
Finally, I want to highlight some of our goals for Abiomed Ciudadano fiscal 'twenty, two and beyond with investments focused on extending our lead and innovation advancing and pellet clinical evidence and establishing commercial excellence with the premier distribution team.
First.
We will continue and invest in R&D as we innovate best in class heart and lung support technologies that are smaller smarter and connected to improve ease of use and clinical outcomes.
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We plan to execute multiple rct's, including stemming the to you protect for and advanced the recover for cardiogenic shock designed with the goal of achieving class one guidelines overall.
In addition, we expect to further validate the safety and efficacy of Impella and the importance of complete Revascularization and high risk PCI with the publications of protect III and restore E F.
For cardiogenic shock positive clinical results presented yesterday at the Sky scientific sessions for.
For the physician initiated national Cardiogenic shock initiative will be published.
Separately the positive results presented by the M. H L. W. P Bad Japanese Heart Committee will also be published before.
Because of these cardiogenic shock patients are difficult to randomize and concern are best practice protocols are derived from over 10 years of real world evidence and over 100000 patients with physician initiated and prospective FTA and P. M T. A studies and the U S.
Europe and Japan.
This new paradigm focuses on improved survival and native heart recovery.
And finally through a combination of our U S distribution expansion and leveraging camp PCI, we plan to deliver best in class training and education onsite and online with the goal of identifying patients improving outcomes and driving impella adoption.
Before I conclude I want to share of patient story.
Chris Kirkman, and a 48 year old husband father, and sales director from Zachary, Louisiana has the family history of heart disease and has lived with hypertension for 20 years and December 2020, after experiencing shortness of breath fluid buildup of round as abdomen and difficulty sleeping Chris visited of local emergency clinic.
He was for prescribed medication and sent home.
Chris the symptoms gradually became more severe over the next few months when they experience trouble breathing.
<unk> wife drove into the local hospital, where he was diagnosed with advanced coronary disease and congestive heart failure with poor ejection fraction at 20 per cent. He was told he was too high risk for bypass surgery and discharged home with the wearable defibrillator.
Chris was then referred to interventional cardiologists, Dr. Abraham of Baton Rouge General Bluebonnet, Dr. Abraham of identified Chris as an appropriate candidate for protected PCI with Impella when he return for the scheduled procedure Dr. Abraham successfully achieve complete revascularization with the help.
Of Impella CP heart pump and Chris was discharged home. The next day during his follow up exam, Chris's ejection fraction and improved to 45 per cent.
Today, Chris as thankful to be back at work and enjoying and healthier lifestyle and with his wife and three children.
In conclusion.
I'm very proud of our employees and customers for their dedication and courage during the COVID-19 pandemic, despite the challenging circumstances and both professional and personal levels Abiomed Ciudadano delivered one of our most productive fiscal years and my 17 year tenure as CEO I.
I am confident that Abbvie med will not just be a successful company, but will drive a new standard of care for multiple of growing populations of high risk heart failure patients around the world.
We look to the new fiscal year with great excitement because we are a stronger company today and have a clear path for execution to fulfill our heart recovery mission and.
And last we sincerely appreciate the continued support from our patients customers and shareholders.
I will now turn the call over to Todd.
Thank you, Mike and good morning, everyone.
Now starting with Q4 results.
As Mike mentioned, we delivered record revenue of $241 million and increase of 17% year over year with double digit growth across the U S Europe and Japan.
We leveraged our abiomed two point of COVID-19 playbook, which allowed us to transition to the Green phase, where we grew patients and revenue year over year and delivered on our innovation regulatory and clinical milestones. Despite the current environment.
Turning to our regional performance.
U S revenue grew 13% to $196 million, driven by a 13% increase and patient utilization.
We saw double digit growth and both high risk PCI and cardiogenic shock.
The pandemic hit peak levels and the first few weeks of January which impacted patient utilization.
However, as COVID-19 cases, and related hospitalizations and began to decline and we executed our playbook, we delivered sequential improvements and patients and revenue and each month of the quarter.
We also set of patient and revenue record and March.
At the end of our fiscal Q4 and the U S. The CP is now in 1000 and 509 sites.
We have placed the impella five <unk> and 663 sites.
And the Impella five five with smart assist is now and 211 sites up 53 sites versus prior quarter.
Lastly, the Impella RP is now and 588 sites up 19 versus Q3.
U S reorder performance and the quarter was slightly below a 100 per cent.
And average combined inventory at the hospitals for the Impella two five and CP was four seven units per site consistent with the inventory levels. We saw in Q3.
Turning to outside the U S and Q4 total revenue was $46 million up 33% year over year, driven by strength in Europe and Japan.
Our European revenue increased 28% year over year due to higher patient utilization and several markets, such as Germany, Austria, and the U K and the benefit from the Euro U S dollar foreign exchange rate.
Similar to the U S and Europe, we saw an impact in January when certain countries mandated lockdowns as COVID-19 cases and deaths accelerated.
However, here too we leveraged the COVID-19 playbook executed on our plan and delivered monthly sequential improvement throughout the quarter.
Japan continues to perform very well delivering $11 6 million and revenue up 38% year over year driven by patient utilization.
We opened 10, new sites and the quarter, bringing our total to 166 sites.
Moving forward gross margin for Q4 was 89%.
Flat compared to the prior year due to benefits from increased production volume offsetting higher material spend and stock based compensation.
R&D expense totaled 32 million and increase of 26% from the prior year.
And the value of our ongoing innovation has been evident throughout the past year and we believe it will continue to create value as we invest and advancing the impella ECP XR sheath breathe of Oxy, one system and Impella BTR and.
And and clinical evidence with protect for stemming D to you and danger.
SG&A expense for the quarter totaled a 100 million of 20% versus prior year.
The increase was due to targeted investments, we made and expanding our distribution team Inc.
Incremental advertising and higher stock based compensation.
And the quarter GAAP operating income grew 8% to 63 million translating to an operating margin of 26 per cent.
The variance versus prior year again was driven by growth investments and higher stock based compensation.
Net income for the quarter was $57 million or $1.24 per diluted share for.
The 70 cents and Q4 'twenty.
Net income increased 79%, primarily due to the mark to market investment and Shockwave and <unk>.
<unk> impacted our reported EPS by <unk> 13 cents and the quarter.
Our balance sheet remains robust.
And Q4, we generated $86 million of operating cash flow and approximately $275 million for the year.
As a result, we ended the fiscal year with 848 million and cash up $197 million or 30% versus last year, while remaining debt free.
Our strong balance sheet provides us with stability as well as with flexibility to make continued investments.
Now turning to our full year performance.
Throughout the fiscal year, we were agile with the within the COVID-19 environment navigating the challenges presented by it but remain disciplined and executed on our goals.
As a result, we saw quarterly improvement and both patients and revenue and delivered global revenue of $848 million and increase of 1% versus prior year. Despite the global pandemic.
By geography on a year over year basis, the U S declined 2%.
While Europe, and Japan grew 12, and 22% respectively.
GAAP operating income for the fiscal year, 'twenty, one with $230 million down.
Down 8% compared to the prior year, which equates to a 27, 1% operating margin.
We took a fiscally disciplined approach throughout the year, we control of discretionary expenses and instituted temporary actions to reduce costs, while investing at record levels and innovation.
And fiscal year, 'twenty, one, we invested $122 million and R&D up 23% year over year.
Additionally, we added 40 heads towards distribution team within the year with the majority occurring and our fourth quarter.
Net income for the year was $226 million or $4.94 per diluted share for.
First is $203 million or for dollars and 43 and the prior year.
The 11% increase was primarily driven by our equity investment and Shockwave.
Lastly, turning to our guidance for fiscal year 'twenty two.
For the full year, we expect revenue to be and the range of 990 million to 1.13 billion, which translates to 17% to 22% growth for the year.
At the low and our guidance assumes some continued uncertainty with COVID-19.
Namely unevenness and recoveries caused by resurgence is national Lockdowns new strains.
She and availability and adoption.
At the high end of the range. Our assumptions include vaccines of broadly distributed leading to lower new COVID-19 cases, and a social and economic return to normality.
And it should have a positive effect on our customers and our business.
As we typically do and issuing guidance I would like to provide some color on our expectations to the seasonality of our fiscal year.
And Q1, we anticipate that utilization will remain uneven as we continue to endure the different transition pace across geographies of resurgence is recovery and vaccinations globally.
However, we remain confident and the efficacy of our playbook and execution and our ability to continue to treat patients and this environment and believe revenue and Q1 'twenty two will be flat to slightly above Q4, 'twenty one revenue of $241 million.
Historically Q2 is a seasonally slow quarter for cardiovascular devices due to the summertime slowdown and the Cath lab and physician vacations.
We believe this could be exacerbated this year, given the potential vacations and pent up demand for travel.
So we expect Q2 revenue to be flat or slightly below the Q1 pace.
As we transition to the back half of the year, we typically see sequential lift in Q3 based on increased hospital activity and physician engagement.
And in Q4, our March quarter, we expect to have our best results as we and our fiscal year.
Turning to operating margin, we expect our fiscal year 'twenty two margin to be and the range of 24% to 26% as we step up targeted investments and innovation clinical evidence and distribution.
A significant portion of our incremental investment will be and R&D as we innovate and best in class heart and lung support technologies.
And further validate the safety and efficacy of Impella with multiple ongoing randomly randomized controlled trials.
We also plan to expand our distribution and.
Accelerate marketing initiatives and grow our training and education programs.
In summary fiscal year, 'twenty, one where the challenging but very productive year for us as we endured the pandemic and transitioned to abiomed to point out.
We are pleased to have delivered year over year topline growth achieved GAAP operating margin of 27% and increased our cash to $848 million, all while continuing to make necessary investments to drive abiomed long term sustainable growth.
We have come through and exceptionally challenging the ear I am proud of our employees around the globe for the commitment and hard work and for their accomplishments I am very excited for the year ahead as we continue to build the new field of heart recovery.
Operator, please now open the line for questions.
Thank you to ask the question you would need the press Star then one of your telephone to withdraw your question. Please press the pound key.
Our first question comes from the line of Margaret <unk> with William Blair Your.
Your line is now open.
Hey, good morning, guys. Thanks for taking the question and.
I wanted to start a little bit with guidance and then a bigger picture question. So the.
The first can you provide any more clarity on March and April.
And then as we look at kind of the Q1 comments that you made Todd yeah, it looks like and.
Historically and maybe your.
One is high of 6% the last several years and.
Given that we're kind of on the backend of the recovery and you're moving into the Green phase and why shouldn't we assume the Q1, maybe there's a little bit better and.
Of that and.
And given what we had seen in Q4.
Next question and thanks Margaret for the question. So if you think about the progression and in Q4, we did start off fairly fairly soft in January that we highlighted on our last call and then we did see sequential improvement in February and March I would tell you. If you look at just our high risk PCI performance of March.
You can make an argument that there was a little bit of bolus from from procedures that were deferred I would say and December into January so as it looks for from our April perspective, we're not going to provide April actually for <unk>. At this point of time I think we have factored that into the color. We provided about Q1 and our prepared remarks.
And it would be flat to slightly above Q4, but ultimately we think that's the that makes sense at this point and time for based on what we've seen so far in April.
Okay and.
And then you know and.
And in terms of the beat at least relative to our number of 505 five seem to do really really well and.
Any kind of color you can give their differences and utilization of accounts, maybe the upgrade the five five for five though.
Or are you going deeper and accounts getting is that product improvements.
Yeah.
Yeah, I mean, mikes and Mike's comments of 555% and surgical business was up over 40% and the quarter. So it continues to perform very well where and over 200 hospitals today, we'd expect that to continue if you look at our patients our patients are up substantially as wallet and five five of degree product and I expect to see that momentum.
Continue into fiscal year 'twenty two.
Yeah.
Okay.
And just kind of last one yeah, and kind of a little bit bigger picture and you guys have a lot of things out there that youre investing and right now whether it's Matt, but it's the RCT.
And you've got the Ecmo platform.
And you know even the shockwave of investment on the side.
So a lot going on at ECP and the rats.
As you think about kind of the the next two to three years.
And how do you outline those various types of opportunities and what's the next thing that you're going to spend your cash flow.
Yes.
So the market. This is Mike. Thanks for the question on the Big picture, we come out of COVID-19, all in on innovation and clinical research and on distribution and so I think you're going to continue to see that in the tactical execution for.
For innovation and you're going to continue to see the the execution of these new products that are revolutionary ECP.
And the Impella connect Ecmo and pehl of five five bridged the recovery I mean these are this is the new innovation, that's going to take heart failure and focus it on heart recovery for clinical research and we're now taking all of the studies and the leverage that we've done and we posted the summary of the clinical studies on a slide and all.
On the website, but it's just we've learned now how to optimize high risk PCI, we've learned how to optimize cardiogenic shock and where we've learned how to optimize survival and and and returned to baseline for acute on chronic heart shock. So these are the cardiomyopathy patients and so those of the things we're working on.
And we think we're going to further our lead across the board and of course, we're going to solidify our patent position as we go so we're very excited.
Because as I said in my prepared remarks, I do think we will have the path forward and create a new standard of care for high risk PCI for semi for cardiogenic shock and for heart failure. Overall, so we're excited to be where we are coming out of the year.
Yeah.
Great. Thanks, guys.
Thank you our next.
Next question comes from the line of Chris Pasqual with Guggenheim. Your line is now open.
Thanks, and congrats and nice finished for the year a couple.
Couple of questions one just circling back on the the margin guidance.
And that's down obviously from FY 'twenty, one down quite a bit from where you guys were and 19 and 20.
I appreciate the the investment and you guys gave some clinical trials starting to ramp up here and we're also coming off of the year, and which R&D spending increased quite a bit. So just curious on the other elements of the investment there.
What are you doing from a distribution standpoint, that's the is different and will require a significant step up and do you view. This as a one year drop and profitability and then you would start to see leverage again or is this a multi year.
Phase you're entering into.
Yeah. Thanks for the question Chris.
About our investments for this year I mean, we're all in on our what I've called growth enhancing investments. So it's innovation, it's clinical evidence and its distribution and so when you think about innovation, it's smaller smarter more connected devices ECP expandable sheath. The AI algorithms I think about the investments, we're making the BTR, which again with <unk>.
And up another 100000 patient population for us for for Heart failure, and then continued investment and free brief when I look at clinical evidence, it's really stemming protect for you know the early feasibility study with ECP I look at these as more digital events that required investment there not really long term and.
Investments in R&D, So I think over time Youll see R&D as a percentage of sales will moderate as we execute on our trials and then the third big bucket is around distribution. We are expanding the distribution team. Chris. We are we are if you went back and looked at our performance over COVID-19, we noticed that the smaller regions.
It tended to perform better and some of our large and regions. So we've made the decision to go from 17 regions and the United States to 'twenty, three we started making that investment.
Investment in Q4, you'll see a little bit more of that investment and Q1. So we are expanding our distribution team putting more feet on the street and having more local leadership, we are expanding advertising and our direct to patient initiatives that Mike highlighted in his comments again targeting that 319000 untreated population.
Utilizing the protect for and then we're going to be doing a little bit more trade shows and education and so I think some of it in the R&D and most of it and R&D is going to be I would say temporary over the next year or two.
The big investment year for us.
With that said you know at our operating margin guidance of.
24 to 26 midpoint of 25 percentage is still pretty strong given the fact that would drive and 17 of 22% of topline growth.
That's helpful. Thanks, and maybe just to.
And follow on there you touched on this a direct to consumer initiatives trying to get at some of these are the broader population of patients who could be appropriate price PCI, but youre talking about patients who are undiagnosed, which always.
It brings up questions about really the feasibility of.
Getting at that type of population, it's not as if.
And we're not looking for heart disease.
In this country. So how realistic is it to really bring those patients into the fold, especially since penetration of the impella supported PCI within the diagnosed population is still relatively low today.
Chris that's the good question and very insightful relative to why high risk PCI still remains out there. If you look at <unk>. When they started they went out and identified the patients that were surgical turned downs. They werent considered for the Cath lab, because they didn't have the technology the <unk>.
Same is true with mitral as well as the watchman when protect you started none of those patients once of the Cath lab and and nearly all of those patients had already been turned down for surgery, but not considered for high risk PCI. The exciting thing about protect for and the engagement of the heart out community and heart failure cardiologists.
Typically is they don't consider PCI and general practice and what they really look at it as optical medical management or the invasiveness of of surgery, which many of these patients are turned down so moving forward because they are involved and the design of our protect for and as one physician described it the other day and a broad.
<unk>. He said the protect for is essentially of heart failure study and what it does is it opens up another therapy for this growing population and these type two diabetes patients that have poor ejection fraction. They don't want or there are turned down for surgery.
And you can see of benefit with protected PCI, what's the.
Unique about and what's new is that our protected PCI patients show and improvement in their quality of life and showing improvement and their ejection fraction and 90 days and so that's what's unique and now that we look at the historic trends when people do show up and the hospitals. They usually for these type of case.
And as they only look at it at the and and try to look for corners. The it's around 17% of the time and it's less than five per cent of the time. The people are actually getting revascularization and the index admission so theres a lot of opportunities there and it's it's not anyone's fault. It's just that the heart failure of community has not been looking.
That are considering a protected PCI solution because in the past PCI did not improve yes that was only done with open heart surgery with cabbage moving forward, that's something we've been able to show and multiple FDA studies protect to protect III and also and restore yet and that will be the gain and I believe that's why heart failure the heart failure.
The overall will get engaged.
Thanks.
Thank you.
Our next question comes from the line of Anthony Petrone with Jefferies. Your line is now open.
Thanks, Dan.
Good morning, congratulations on the quarter, all of everyone's doing well and one on reimbursement and one.
One of them protect for the.
The first one of the reimbursement is just sort of a.
A rehash and a recap of the IP P. S proposals from earlier this week, maybe specifically on the proposal.
The.
Recommendation of shift high risk PCI attitudes and his team two of joining codes and maybe just how you're sort of and.
And you're viewing that it seems overall of that this actually cleans up reimbursement going forward and maybe perhaps shrink and the process and future of round. So maybe just.
And some views there and then all of a follow up on protect for.
And then thanks for the question on CMS and the reimbursement we agree with your comments were pleased and we believe it now provides a permanent solution. What we've always talked about is that and color is a platform with multiple patients and so we positioned the products and the reimbursement and the any even in the future of some of the.
And the pricing you have a four hour pump per procedure that's of high risk PCI, you've got a four day patient that's the cardiogenic shock patient and the ICU on Impella connect with smart algorithms and you've got this acute on chronic shock patient. That's a four month up two of four months potential patient with.
With the five five and future BTR pump. So it definitely aligns completely what were doing so it allows for the differentiation for the type of resources and support that we provide we do think it's a permanent more permanent solution and it also really aligns with our hub and spoke strategy as Todd mentioned.
We saw that when COVID-19 hit we saw a bigger growth in the small to midsized hospitals and regions. So we went a little bit leaner and a little bit faster by adding more regions and more team approaches.
We also saw and March a massive swing back and the large centers and so part of that has to do with our hub and spoke coordination.
And if a patient of ends up and any cath lab, we're going to we're going to know about it and we're gonna be there to support and will be and the cloud watching.
But then we can also help monitor and and work together the top centers that do the most complex work with the spoke centers and we are and what CMS also did was slightly increase our DRG 268.
Which allows those outlying hospitals the placed the impella stabilize the patient and then make the decision if they want to send them to the the high and center. The last piece of this has to do with our distribution. We are going to maintain this distribution overall and all of the Cath labs, but we do have a dedicated team now thats of heart recovery team.
And that's working directly with the heart surgeons and the heart failure cardiologists, and we think that'll help with the referral network, but it also allow us to go deeper to those transplant centers. There of about 140 of them that really do the most advanced work and the those chronic patient care that we're excited now to bring five five BTR and RP did rebound.
Oh as well and this quarter, we're gonna put smart assist on RP. So we'll now get some of the information on of Biventricular patient that has never existed and we're gonna make further improvements to the RP to ensure that the surgeons also have a way to utilize it so lots of lots of good things happening with CMS. We appreciate the the work and the thoughtfulness that they put into the.
To the the final rule.
That's very helpful and my follow up on and protect for would be maybe just a broader view here and a sense on timing it looks like you're targeting over 200 patients.
100 sites in Europe. The U S. So just wanted to get a sense of of timing on enrollment and then maybe a question on the design looking at the.
The Gregg stone elite he mentions and obviously the goal here is to operate on more complex.
Cases, and perform more complex revascularization and and Mike. It brings me back to protect two when there was the rotational atherectomy arm and so can you give us a sense if there will be cohorts based on the <unk>.
Specific surgeries and sort of how that will sort of evolve as the study gets underway. Thanks.
So Anthony of the protect for study timing, we're not giving specific.
Timing right now just because we want to get a few a few months away from the transition with the vaccines. We have described in detail of the study Dr. Chuck Simonton and did a webcast on it last year. So that's that's still up on our Investor page and we will give more details but to your specific question on the design and think of it as a on pump.
<unk>, which is the impella supported PCI versus off pump PCI, which is where the majority of these patients a day, they actually don't get a balloon pump they get the in and out approach where the physician has to inflate the balloon are placed and quickly or otherwise the human and Amazon collapse or they stage the patient or they do.
The combination of things are they limit. The contrast, because they're worried about acute kidney injury. So there will be patients that they will have the option to use the balloon pump.
And and and they they they know that they know that today, that's partly why they they don't necessarily use it today because for many people that it's not something that's going to provide human and support at the patient gets in trouble and the majority of these patients today are in and out of what protects you showed and other studies with Impella showed is that these patients that when they get.
Complete revascularization.
With Impella support.
We've been able to demonstrate significant improvements and the ejection fraction or the quality of life for these patients at 90 days and most recently that was presented and the restore E F and what the protect III study also showed is lower adverse events on bleeding. So we've made great great progress on access closure, but we're also seeing.
The physicians are doing a better job, leaving less ischemia and when they do that that's where you really see the benefit for the patient and the past cabbage did and does get and improvement in the E. F. Because what they're doing is taking a clean vein and reroute rerouting. The blood flow. So there was an improvement in E F. But there is a price to pay with.
The sternotomy and the pump run and and the and the recovery for a open heart surgery, and so and the and what we what we'll have here is of design study that we'll be able to track everything and in terms of quality of life heart failure, Readmissions and improvement in the <unk> and it's really a.
Hence the of heart failure study designed by the trial this and it will have an adaptive design, but.
But we are we feel very comfortable that the the physicians know the patients are out there and they're excited to work with their referral.
Our network and.
We're very excited that this is kind of you know this is an on label studies. So we're excited to get out there and start identifying these patients.
Thanks for a lot of.
Hop back in queue. Thank you.
Thank you. Our next question comes from the line of Chris Cooley with Stephens. Your line is now open.
Good morning, and thank you for taking the questions and congratulations one of the very strong finish to the unprecedented deal.
Maybe just start.
Was the question on the non Salon.
And the communities.
And the pass through but many of those a little bit of upon the potential new markets.
And then our belongs to the true still very low rates of penetration sort of 'twenty supplant.
And when we think about Europe, and Japan, but the people.
Walk us through how you see.
And so market exposure.
The place when all of sort of reconcile.
The slide on patient growth and revenue performance and snow.
And the 12% sequential increase in Japan, and the most recent quarter and.
Maybe it's the type of them.
The sequential decline in revenue.
And then I've got a quick follow up on some of them.
Thanks, Chris for the question in terms of I'll take the first part in terms of the the Japanese.
Performance and look for in the fourth quarter also continues to perform very well over $11 5 million patients in Japan for the quarter was up 50% Rev.
Revenue didn't grow as much it was down sequentially and the really the function of as simple as we opened up for fewer sites and Japan.
This quarter versus what we did last last year. It was about 10 sites.
This quarter I think it was 14 sites last quarter, and so thats really whats driving I would say a little bit of a disconnect between patients and and revenue in the and the in Japan. So overall very strong performance up 50%.
The second question was around just the countries outside of <unk>.
Outside of everybody and.
Yeah.
No. It was just you know so I'm just kind of true.
Incremental markets and your.
General and timing.
Yeah.
Chris the protect for is the ease of European study as much as it is the U S. So the co Pi is and academic leader and recognize the trial as we've had strong growth and publications from Italy. So the the interim and the interventional Cardiologist Society and Italy has been very act.
<unk> with the publications registry data.
The AR that was recently presented and published the last quarter showing the benefits of Impella with high risk PCI and higher survival by placing the impella before the PCI and and achieving complete reverse.
We are seeing a lift in Europe overall, we're starting to enter some of these other markets and many of these top centers have expressed interest and will likely be and protect for relative to Asia. We remain focused on.
And on Japan is the priority, but we also of planting seeds and again top centers in Asia are starting to.
Two.
Enter into the Impella training and focus on heart recovery. So we think there'll be more of their but we also don't want to lose focus that the.
<unk> three biggest drivers for global standard of care and and for for our execution remain the U S, Germany and Japan.
Thank you.
Mhm.
And <unk>.
When you think about goods.
And so 17 to 23 regions you know conceptually the makes sense of closer to the customer more frequent visits and.
And that drives a greater growth and those.
Its territories.
Curious, though are you seeing similar types of trends and both high risk PCI and.
And some recent populations and.
And then also the system placements on and pellets.
And Matt Hooper.
Help us kind of understand.
And it's really doing well.
And the C or just kind of looking at the sales.
And what kind of lift to proceed.
Some of them from 17 to 23. Thank you.
Okay.
Chris the design of our distribution and and what's happened out there is really part of the COVID-19 playbook. So on the COVID-19 playbook, we're tracking weekly access to the hospitals ICU capacity Impella connect and then we do see a flip back and forth between the high risk PCI.
The patients and the shock patients, we know of shock or pulmonary embolism or ex pellet and those things go up the ICU and fill up that means that we're going to have a bit of a delay and high risk PCI at the big centers, but that bolus will come back the interesting element of that is our smaller and midsized territory.
And hospitals, they did not see that dip as much because they then potentially do that patient and they don't refer that patient to that to the larger center if.
If we track on shock and you look at the year six out of the 12 months had positive growth eight of the 12 months had flat to positive and to the first two months of COVID-19 last April and May were down and they were down double digits, but after that shock itself recovered.
And and that's kind of part of the the playbook and then and this hub and spoke glass compete piece of this is as we've mentioned we set records and.
In Q4, but in March we set our records for most patients ever most high risk PCI patients ever and most cardiogenic shock patients ever and so we think the playbook works and we liked this hub and spoke network and we liked the changes we've made for the distribution to really capitalize on that opportunity.
Thank you.
Yeah.
Thanks for you.
Our next question comes from the line of Matthew O'brien with Piper Sandler Your line is now open.
Good morning, just a couple of questions on kind of some products that I think are helping the business right now and what else is clearly helping the business.
You know versus just the guidance, which is good to see you getting back up to low double digits here, which I think is kind of what youre targeting for the business going forward or maybe a little bit faster, but for starters on the sheet side of things and I know this is kind of getting down and the weeds, a little bit micro Todd, but what are you seeing as far as utilization of the two five sheath.
Among centers that have access to it and then.
What's the timing on CP is it still still kind of expected here and a few months because and I'm really trying to get at is the starting to accelerate some of adoption of impella because of access of the cheap and then see peak and hopefully help accelerate things a little bit more.
Thanks, Matt for the question. So the short answer is the XR sheet is the priority for CP, we do have it on the two five and we did two cases in the U S last quarter, but the the majority of our larger volume users are.
Very comfortable with access closure today protect III showed we have low single digit vascular complications and bleeding. We also showed that and the stemming D. T. U F. D. A study the single access is now approved also in Europe and has been the the means of choice by a lot.
Of the physicians that are do the most of Impella is and so they'd much preferred today to have the CP theyre comfortable with access closure and they like the.
And they like the single access the.
And what we're doing with CP is you have the XR sheets, which is a five 10-K, but we are also in coordination with that we're making some minor adjustments to the product to augment that but that will require a PMA submission a supplement so that's where we think we're going to have the two aligned by the end of the.
This fiscal year.
But we're also pretty confident that a part of the momentum. We're seeing is just that the the new techniques the new clinical data and the single access really are the preference of our top centers.
Okay makes sense and then shifting over to 505, which is clearly a nice tailwind or meaningful telling right now Mike.
It seems like there was an acceleration and the number of centers using the product or getting access to the product here in fiscal Q4 are those 211 sites entirely sites that are using five of them before.
And then among the sites and again I know, we're getting down into the weeds, but are you seeing some of the the sites that are five five is available more clinicians coming over and starting to use abiomed for other procedures.
And that they can see five fives, the how well it works and how unique it is and then saying, okay, maybe I can UCP Inc.
And some other patients as well so are we getting any of any any signs of kind of some growing momentum because of the 505 throughout the entire center.
Matt the answer is yes, but its remember you have two different customer bases you're of the heart Surgeons and then you have the interventional cardiologists and they worked together well in certain cases, they work together, well and and and Tabret because they're all aligned and the in the hybrid lab, but there still is this inherent competition between high risk PCI and cabbage and what.
We've shown is that the two work together something we call high risk Revascularization and so as we identify these patients. Some of these patients go for high risk PCI and some of these patients go for high risk cabbage, where they utilize impella.
And that was presented by Dr. Ed sold tests from Cleveland Clinic.
And on the approach that they use and and some of those cabbage patients. They do have for kidney function and they need support coming off the heart lung machine.
And this presentation is also still up but what their protocol is is if they were to acute on chronic patient. They go to the Impella five five as the primary driver they no longer use the FIFO.
And the five five is the optical sensor it gives us the ability to see what's happening and the pressure in the left ventricle is ideal for weaning. The NV establish that patient then they decide is the revascularization gonna be done and the Cath lab.
By the intervention cardiologists are they going to do it and the surgical suite with cabbage and certain cases, they if they need the VT ablation and they'll take them to the EP lab and they'll do a VT ablation, but the impella pump is stabilizing that acute on chronic patients that's a different patient than and Ami shock patients, whose first symptom is the heart attack that leads the.
And that patient is still going quickly into the cath lab through the door to balloon time protocol, where they'll put the impella and before they do the PCI. So the short answer is yes, because it's driving the science and the recognition of unloading and it allows us to take patients and make sure that we maintain the ability to still provide a path.
And of the least invasive most cost effective approach to not only keep the patient alive, but send them home with their own heart and so we're really excited to see the leadership by Cleveland clinic on surgery, Cedars out and L. A.
The teams and Chicago.
Across the board the five five is really a revolutionary product for heart failure, and we've added some heart failure of people and the company and and on the distribution. So where we're really are changing heart failure and now to heart recovery and it's a different mindset, but it's what five five enables and what Impella BTR will continue because now we'll have the ability.
And to send the patient home.
And have a pump that runs even longer without a purge.
Got it thank you.
Yeah.
Thank you.
Our next.
Excuse me. Our next question comes from the line of Jason Bedford with Raymond James Your line is now open.
Hi, Good morning, just a couple quick ones that are realized.
For the top of the hour.
Just on on five five so the five five and five O is 15% of U S revenue what percentage is five five for these days.
I don't have the actual percentage of in front of me. It was the majority of the business now is five five I would say the close to its over its probably over 75 per cent Jason.
Okay.
And then on the guide just wondering if you could talk about the expected growth in the U S, which obviously has a much easier comp versus international.
For fiscal 'twenty two.
And I think when you look at it across all three regions, we do expect to see double digit growth.
And obviously rest of the worlds of O U.
And it's gonna be growing a little bit faster with with Japan, and in Germany, but even in the United States, whether you look at the low medium and high end of our range, we do expect to see nice growth.
Double digit mid teens growth and.
And the U S. A lot of it also driven by the surgical business.
So I think overall, it's pretty it's pretty evenly distributed across all three regions.
Okay. That's helpful. Thanks, and just quickly Mike where are we with recover for in terms of starting that trial.
We've we've added Executive Committee, Jason we're working through some of the specific details of it is very difficult population to randomize as you know we've tried in the past we think we can satisfy that now we're looking at some things around consent and yesterday, we presented the final.
<unk>.
Summation of the 406 patients and the N CSI.
With the 71% survival, but what's really interesting and the presentation is that the status of C, which is the.
Kind of the classic shock patients had a 77% survival, we even have a very very positive survival on the on the class C, which is the of cardiac arrest group. So we're we have a tremendous amount of information. We're now working through the logistical challenges and how we will do the consent, we expect to finish the design ended the year and.
And start this study the following year, but it's a it really is a difficult population, but we feel very confident and now with the best practices, and Japan, and Italy, and Germany, and the U S that we have the the formula for the higher survival with more than 90 per cent, having native heart recovery.
For this type of patient.
Alright, Thanks, Mike.
Yeah.
Thank you. Our next question comes from the line of Marine and the vote with T. <unk>. Your line is now open.
Hi, Good morning. Thank you for taking the question just a quick one here to follow up on the comments you made the changed and wanted to confirm.
All of like to see that a U S patient metric and I know you gave that does this quarter up 13% year over year and high teens, the right bar to think about if we think about the midpoint of your guidance for fiscal 'twenty two.
Are you talking from a U S perspective, yes.
Yeah exactly.
I would say patient utilization would be somewhere and that in the mid mid teens I think it makes sense.
Based on our guidance.
And I back into that I, just wanted to confirm given some of the higher asps and and.
And I think you've been seeing there okay and then a quick follow up here I don't think we've heard too much on breathe.
And it seems to be getting very good feedback, but love to hear whether you've included any of that revenue in fiscal 'twenty to whether thats something we can see as a meaningful contributor to the here. Thanks for taking the question.
Yes. Thanks for your question I think in terms of a meaningful impact it's been a it's been of great launch. We you know we had five sites right now treated over about 20 patients I think of as you think about fiscal year 'twenty two it will be somewhat of a controlled rollout that we've talked about so again focus on training and education and more.
Importantly, patient outcomes. So we'll continue to do our controlled rollout and from a from a from a revenue perspective, I'd say, it's not going to probably of a material impact on us as we think about the big picture.
Really more of a fiscal year 'twenty three story.
Thank you.
Our next question comes from the line of Cecilia furlong with Morgan Stanley. Your line is now open.
And the question. This is calvin on versus sort of just two quick ones for me. The first is just could you share with us your thoughts on what your M&A strategy for FY 'twenty two is going to be.
We anticipate remaining kind of active on that front and 22 and beyond.
And the second is just on could you could you give us an update on stemming D to you on kind of what the pace of enrollment has been on perhaps on full enrollment timing to the extent and you can share. Thanks, so much.
I'll take the first question with regard to M&A and obviously, if you look at our cash deployment strategy I think our top priority remains investment in organic growth opportunities that we believe lay the groundwork for sustainable growth with that said, we will continue to look and new technologies and <unk>.
Core competencies as of the last quarter, we still of a little over $100 million investment on our balance sheet and roughly 15 to 18 companies and we will again continue to look for differentiated technologies that can either increase impella utilization improve patient outcomes anything around access closure and monitoring and but ultimately we're looking for technology.
That can bring additional value to our patients whether and the cath lab of ICU, where she for you.
Calvin on the semi D to you.
Added six sites in Q4, and we enrolled 28 patients and Q4. So we're now at 61 patients enrolled and 26 hospitals.
Got it thanks, so much.
Thank you.
Our next question comes from the line of Danielle and healthy with SBB Leerink. Your line is now open.
Good morning, guys. Thanks, so much for taking the question.
And I actually just have one question and it's tied to.
The longer term growth so I.
Pre heat, you're giving the fiscal 2020 two guidance day, I know youre not going to give us plenty of three guidance Jay.
But at a high level, if you could comment qualitatively physical 2022, and still see things and <unk> com.
COVID-19 and the recovery and things like that so I guess as we look longer term, what's the right way to think about the underlying growth profile of the company should we be thinking about it in line with steward and cardiogenic shock and high risk PCI volume or between now and say this time next year do you.
Feel like you guys are making.
Some of the sort of I don't know, if it's too dramatic to call them deny or some of the folks that were impacted by the H eight data that we said the underlying growth acceleration I know, that's really difficult to answer, but even any qualitative comments would be helpful.
Daniel I would say the high level.
Have you met two of <unk> expects to be one of the fastest growing profitable of medical device companies and we have been for the last 10 years, and we think between our existing products and new products existing indications, new indications and potentially stronger guidelines and existing countries new countries.
Have a decade ahead of us of growth.
And.
Thanks, so much.
Thank you there are no further questions I would now like to turn the call over to Mike Minogue for closing remarks.
Thanks, everyone for the time today, sorry, we went over if there's any follow up questions. Please feel free to reach out to us and have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Okay.
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