Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2021 Abiomed’s Earnings Conference Call. At this time, all participants' lines are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Todd Trapp, Vice President and CFO. Thank you. Please go ahead Sir.

Good morning and welcome to Abiomed’s third quarter fiscal 2021 earnings conference call. This is Todd Trapp, Vice President and Chief Financial Officer and I'm here with Mike Minogue, Abiomed’s Chairman, President and Chief Executive Officer. The format for today’s call will be as follows. First, Mike will discuss third quarter business performance 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 and 10-Q filed with the SEC. We do not undertake any obligation to update forward-looking statements. With that, let me turn the call over to Abiomed’s Chairman, President and Chief Executive Officer, Mike Minogue.

Thanks, Todd and good morning, everyone. At Abiomed we continue to remain both focused and committed to our mission of recovering hearts and saving lives despite the challenging COVID environment. I want to thank our employees and our customers around the world and recognize their determination and efforts under these circumstances. Abiomed delivered a record quarter of $232 million in revenue up 5% year-over-year. We generated revenue growth in the U.S. and double-digit growth in Europe and Japan despite the COVID resurgence. Operationally, we were disciplined and focused on executing our fiscal year tactical plan with multiple regulatory milestones and two, first in human clinical studies. We achieved a 31% operating margin while investing at record levels of $33 million in research and development. Our balance sheet strengthened to a robust $788 million in cash while maintaining zero debt. We also achieved a milestone this quarter as we surpassed over 1000 Impella patents and currently have 851 patents pending. We believe Abiomed has one of the strongest IT portfolios in the medical device industry. In summary, we executed our plan and a solid quarter. For today's call, I'm going to provide three updates. First, I will outline our transition to the green phase in Q4 by leveraging our Abiomed 2.0 COVID playbook. Second, I will highlight the robust clinical data released in October, and finally, I will discuss our momentum with new products and regulatory approvals. So first, as a reminder to investors, we've designated a three-phase red, yellow, green approach for fiscal year '21 to address the evolving COVID-19 environment. In the Q3 yellow phase we were focused on the acceleration of Abiomed 2.0 as we endured the pandemic. This enabled us to achieve our tactical plan and reduce the COVID impact on our commercial performance. These initiatives were accomplished without sacrificing our commitment to employee health or safety. We ramped up our onsite antigen and PCR testing in both Danvers, Massachusetts and Aachen, Germany for early virus detection and administered thousands of COVID tests. This proactive testing reduced employee anxiety and allowed us to get production back to full capacity to build essential lifesaving heart pumps during a record quarter in our 40-year history of the company. Because we provide essential patient support and training to our hospitals, more than 25% of our U.S. field team has received the COVID vaccine from their local customers. We look forward to that number growing as the vaccine becomes more available in the months ahead for headquarters employees. In Q3 we executed on the milestones we control and grew revenue across all geographies. As a whole, hospitals today are managing better than they have previously during the pandemic with more testing, better protocols and vaccinated caregivers. This allows for better patient management and treatment of both COVID and non-COVID patients. However, the virus resurgence in mid-November impacted utilization, especially in the U.S. due to ICU capacity and patient anxiety about seeking in-hospital treatments. At this point, we believe our Abiomed 2.0 COVID playbook will allow for a green phase transition in Q4 despite the early January ramp up in COVID-19 cases. This playbook allows for patient monitoring in the cloud and makes our people more productive and valuable for the hospital. Our Impella Connect online capability is now live at 686 hospitals in the U.S. and there an additional 500 ready to connect once hospitals approve Wi-Fi access. Today, more than half of our U.S. patients are monitored in the cloud with Impella Connect. This enables best in class 24 x 7 support onsite, oncall, and online. As part of our Abiomed 2.0 playbook, we monitor global and local trends at a state, city, and hospital level on Impella usage, new COVID cases and ICU capacity. This enables our flexibility with our people and resources to adapt quickly to essential patients. We have been working with physician societies as well as hospitals to reinforce the importance and benefits of treating essential high risk and cardiogenic shock patients. Also we are investing in educating the public with both online and broadcast TV commercials to encourage patients to seek treatment for their heart disease. Turning to my second topic, new clinical data. In October at TCT Connect we received and reviewed a robust set of clinical data showing improvement in outcomes for high-risk Impella supported PCI data from PROTECT III and Restore EF demonstrated statistically improved outcomes, including better safety and improved heart function post treatment. The improvement in heart function with more complete revascularization is now objectively proven in high-risk PCI with Impella support. The PROTECT IV Physician Executive Committee has locked this study protocol and we have already initiated site visits with first patient enrolled targeted for next quarter Q1. We are grateful to these physician experts for the last year of study design work and affirmation of protected PCI best practices. For cardiogenic shock we continue to see improvement in survival validated using best practice protocols such as placing the Impella before the PCI and minimizing inotropes. These best practices have been generated over the last five years and were derived from multiple prospective physician studies and real-world evidence including FDA studies. These 2020 updated cardiogenic shock best practices now include early identification of right heart failure with SmartAssist software and escalation to Bi-Pella support with Impella RP. Within the quarter, Impella RP revenue grew 21% versus prior year due to strength in patient utilization and expanded FDA emergency use authorization for COVID complications including pulmonary embolism. Recent studies in both Italy and Japan have also contributed to the validation of our cardiogenic shock protocols. As a countrywide initiative, Japan now has one of the highest survival rates for cardiogenic shock in the world, 77% survival and over 90% native heart recovery in survivors. To note, just four years ago, the CULPRIT study from top European heart hospitals published in the New England Journal of Medicine reported a 50% survival for cardiogenic shock patients using all devices as salvage post PCI. These higher survival rates contributed to Japan's sales performance of 38% in revenue year-over-year despite COVID. Moving to regulatory approvals and new products, our third and final topic, we made significant progress with two 510(k) clearances and two first in man studies completed within the quarter. We received 510(k) clearance for ECMO Breethe Oxy-1 system and treated our first eight patients with a mix of V-V, V-A and ECPella cases in the United States. The feedback has been positive, highlighting the ease of use, portability of the console and early mobilization. Additionally, we achieved two important milestones toward breaking the small bore barrier to reduce physician access and closure concerns. First, we completed the first five patients from our U.S. FDA early feasibility study for the Impella ECP, a true nine French pump ideal for a high-risk protected PCI. This safety data was submitted to the FDA and approved as sufficient data to support the expansion of the Impella ECP trial to five more hospitals and 15 more patients. Second, we received 510(k) clearance for the Impella XR Sheath with the Impella 2.5 heart pump. We treated eight patients with the XR Sheath outside of the U.S. in Q3 and have now transitioned the majority of our focus to the Impella CP for both 510(k) clearance and PMA supplements. The XR Sheath has flexible nitinol braids that momentarily expand during Impella delivery then recoil, reducing closure challenges and complications at the access site. These milestones are important steps to drive ease-of-use, expand our customer base and continue to drive better patient outcomes. However, it is important to note that bleeding and vascular complications in PROTECT III our FDA study were less than 2% for both showing the technical and clinical progress made over time with training, education and innovation. Our surgical platform continues to deliver strong performance, driven by the Impella 5.5 with SmartAssist. Our Impella 5.5 is a minimally invasive, forward flow, fully unloading heart pump designed for heart surgeons to implant directly with the chest open or through the axillary artery to avoid an invasive sternotomy. We created a dedicated surgical and heart failure team focused on heart recovery for acutely decompensating heart failure patients in shock. This week at the surgical STS conference, Dr. Ed Soltesz from Cleveland Clinic presented data from a large study of 356 Impella 5.5 patients at 16 [ph] hospitals in the U.S. and Germany. The study found a 79% survival rate with the majority of surviving patients recovering their native heart. In Q3 our U.S. surgical business grew 48% year-over-year driven by strength in patient utilization. We have now treated more than 1000 patients with the Impella 5.5 and demonstrated an improvement in patient outcomes compared to historical rates. While the Impella 5.5 has exceeded a run time of more than 500 days in our engineering labs, the Impella BTR pump is designed to run for more than one year and allow for home discharge with patient metrics in the cloud. The Impella BTR pump is now one year away from our anticipated first in human study, both 5.5 and BTR have ideal designs because they are minimally invasive via the axillary artery and pump with the heart providing optimal weaning capability and improved forward flow to the kidneys. I would like to end with a patient story from this summer. In August, Chavez Adams, a 29-year-old lawyer from North Carolina tested positive for COVID-19 and quarantined for two weeks. In September, Chavez developed a fever and went to his local urgent clinical care, where they found his heart was racing above normal and he passed out. Chavez was immediately admitted to WakeMed Health with an ejection fraction less than 20% and went into cardiogenic shock. Dr. Neupane and his team determined Chavez was experiencing cryogenic shock from myocarditis likely due to COVID-19. The Impella CP was implanted to allow his heart to rest. After three days of support, the Impella was weaned and explanted and care was covered by BlueCross/BlueShield. Chavez returned home with his native heart and now has a normal heart function. Today he is back at work and enjoying an active lifestyle with his wife Ashley. In conclusion, Abiomed with our dedicated customers continues to improve patient outcomes documented in global clinical studies, which are posted on our website, as we advance our product portfolio and best practices. As we enter the final quarter of fiscal year '21, we remained focused on achieving our tactical plan and transitioning to the green phase. Abiomed is a stronger company today than before the COVID pandemic and is uniquely focused on recovering hearts and saving lives for growing high risk populations. We are excited to close Q4 as Abiomed 2.0 and enter fiscal year '22 with our best ever clinical outcomes from existing products, existing indications and existing countries. Next fiscal year Abiomed will expand into new products, new studies, new indications and new countries. I'm sincerely proud of our employees and grateful to our customers who put patients first every day. We also appreciate the continued support of our investors and remain focused on growing shareholder value. I will now turn the call over to Todd.

Thanks Mike and good morning everyone. As Mike mentioned, in Q3 we delivered a record revenue quarter for the company of $232 million, an increase of 5% versus prior year. While our business continues to be negatively impacted by COVID-19 trends, we were able to deliver positive year-over-year revenue growth in our top three markets by sticking with the priorities and our COVID playbook, remaining focused and leveraging our strengths for operating in this uncertain environment. By region, the U.S. reported revenue of $189 million, up 2% versus prior year, primarily due to positive sales mix. U.S. patient utilization was down 2% year-over-year; however, we had comps last year in October, especially for cardiogenic shock. As Mike mentioned, the COVID-19 resurgence impacted continued recovery and patient utilization during the quarter. We started to see a broad based impact from the resurgence beginning in mid November. Our ability to track COVID cases in ICU capacity at local levels enabled us to see trends between higher new cases in ICU capacity and the impact to utilization and recovery. During the quarter, we were able to adapt and saw some areas begin to recover. At the end of December in the U.S. the CP is now in 1492 sites. We have placed the Impella 5.0 in 660 sites and the Impella 5.5 with SmartAssist is now in 158 sites, up 37 sites versus prior quarter. We believe that all 1100 heart hospitals will acquire this breakthrough technology. Our controlled rollout of the Impella 5.5 continues to deliver strong performance as our U.S. surgical portfolio reported a 48% increase in revenue versus prior year. The Impella RP is now in 569 sites up 17 sites versus Q2. RP had a strong quarter with revenue increasing 21% versus prior year driven by patient utilization. As a reminder, in July, the FDA issued an EUA to expand the use of Impella RP to include patients suffering from COVID-19 related right ventricular complications, which is a great validation for this life saving device. In the quarter, the reorder rate was 104%, the same percentage as the prior year. Average combined inventory at the hospitals for the Impella 2.5 in CP was approximately 4.7 units per site as compared to 4.6 in the prior quarter. Outside the U.S. revenue totaled $43 million, up 18% year-over-year. Our European revenue increased 12% versus prior year, driven by higher patient utilization in several key markets, including Germany, Switzerland and Italy and a benefit from the euro-U.S. dollar foreign exchange rate. Within the quarter, both high-risk PCI and cardiogenic shock grew mid single digits. In Europe, we started to see an impact from the COVID resurgence early in the quarter, when certain countries began issuing national lockdowns. However, we were able to pivot our strategy and began to see some recovery and patient utilization in mid November through December. The COVID pandemic continues to remain uncertain, with differences by country on the timing of the recovery. In Japan, we had another strong quarter and delivered $12 million in revenue, up 38% over prior year, driven by higher patient utilization. We open 14 new sites during the quarter, bringing our total to 156 sites out of the potential 350 Impella hospitals. We did see an impact in November as COVID cases began to rise; however, we saw some recovery in December. Japan's performance has remained more resilient than other countries during the pandemic because our patients are mostly in cardiogenic shock. Japan also has been able to leverage their best practice protocols in the COVID environment in order to treat shock patients recover their native hearts and deliver record survival rates. Moving to key financial metrics, our gross margin was 82.3% in the quarter, up 30 basis points compared to the prior year. The year-over-year variance was driven by higher production volumes, which more than offset the investment to accelerate the rollout of Impella Connect. One of our main objectives in a red, yellow, green approach to navigating the COVID environment is to continue innovating and investing as we execute our strategy and our tactical plan. During the third quarter R&D expense increased 29% versus prior year to $33 million. We believe our targeted investments in technology and clinical data are critical for improving patient outcomes and sustaining long-term growth. SG&A expense for the third quarter totaled $86 million, up 1% versus prior year. We are managing our discretionary costs while continuing to invest in marketing and training programs, including CAMP PCI in targeted advertising, and to provide a safe environment for our employees. In the quarter, our costs included over $0.5 million for COVID testing and PPE for our people. This spend is being offset from lower expenses such as T&E and trade shows, among other postponed activities in the current environment. In the quarter, operating income grew 2% to $71 million, translating to an operating margin of 30.8%. We delivered strong margins while making the necessary investments to support future growth. GAAP net income for the quarter was $62 million or $1.35 per diluted share, versus $69 million or $1.51 in Q3 of '20. The year-over-year variance was driven by a mark-to-market on our Shockwave investment and a lower effective tax rate. Our tax rate for Q3 was 23.4% versus 28.7% in the prior year, partly due to higher excess tax benefits in this year's rate. Our balance sheet remains very strong. We generated $79 million of operating cash flow in the quarter. We ended December with a cash balance of $788 million, up 32% over last year with no debt. Our top priority for cash is to support organic growth initiatives and continue to build on our intellectual property advantage which we believe will generate higher returns for our shareholders. To continue to provide transparency during this time, we want to give our investors color on our top line expectations for our fiscal Q4. In the first few weeks of January, the COVID pandemic worsened, further impacting patient utilization. However, as we have experienced during the COVID era, we do expect to see recovery in patient utilization and revenue during the quarter. The patient population that we treat is high-risk and our procedures are essential. Although the timing is tough to call, we believe our COVID playbook allows us to treat many of these patients as they work their way back into the system. Also, we do anticipate a potential benefit as the COVID vaccine becomes more widely available, and infection rates decline. With these factors in mind, we expect Q4 global revenue to be in the range of $225 million to $235 million, representing 9% to 14% growth compared to Q4 of last year. So in summary, despite COVID headwinds, we delivered a record revenue quarter. We believe that our focused strategy will serve us and our stakeholders well on our path to delivering long-term sustainable growth with new products, new indications and new geographies. We are well positioned for the future with the resources to invest in innovation and clinical data while delivering strong profitability with a robust balance sheet. We are optimistic about the future and the opportunity ahead as we continue to create the new field of heart recovery. Operator, please now open the line for questions.

[Operator Instructions] Our first question comes from the line of Raj Denhoy from Jefferies. Your line is now open.

Hi, good morning. Wondering if maybe I could follow Todd with once you finished with they're just kind of on the trends over the near term, I'm curious how things fell out over the months of November, December or early January? Are you still in a period where you're seeing demand lower than you would expect and you're expecting a pickup or you already started to see a resumption maybe of growth that gives you confidence that the fourth quarter will be a bit better?

Yes, thanks Raj for the question. So as I mentioned, we did see -- start seeing the COVID resurgence in mid November and it did, I would say escalate in December and even further, I would say escalate probably towards the end of the last two weeks of December, and in the first few weeks of January and so, both new cases and deaths. And so, for us the impact on the hospitals in the procedure volumes because of patient fears and ICU capacity. So I think like I said it did accelerate towards the end of December and into Feb and March, I mean into January right now. And so that's really what we're seeing from a trend perspective. What we've seen in the past Raj, is we know that when we do see these blips, like we saw in Q2 with Florida, and we saw a little bit in Q3 in the southeast and the mid Atlantics is that when we see blips, the pages [ph] typically come back. And again, the timing of it is tough to call, but we do expect to see some of these patients that were missing in January come back in February and into March as well.

Okay.

And Raj, just to be clear, the forecast, the range I've given, 9% to 14%, it takes into effect what we saw in the month of January.

Okay, hopefully and I just wanted to ask Mike one question to you just on ECP and the timing there. So you're moving into this next phase, five more sites, you mentioned 15 patients, maybe you can offer just in terms of how this continues to develop beyond this sort of pilot study now, you know, what a pivotal looks like and what really the timing is when ECP could get kind of fully approved. And maybe also as a corollary to that, as you expand in these kind of follow up studies, what it suggests in terms of the number of sites you will have access and how to think about that becoming a more important product for you?

Raj, thanks for the question. I'll give you as much as we can confirm, knowing that we don't have a prudent prediction yet with the FDA on the final study. We have to work our way through. The good news is this is a breakthrough product. The first five patients went very quickly. And we submitted to the FDA and they approved based on the data we provided that it was -- it hit the marks for safety. We're now in the pilot phase. So we're now going to do another five centers. So of 10 centers total we'll go to 20 patients total, which looks like if you remember PROTECT I, which was a 20-patient population. So after that, we'll submit again with a pivotal, where we'll target high-risk PCI patients. We do not have confirmation about the size of that or whether or not we randomize to our own products or we're just going to compare to PROTECT III. We'll work directly with the FDA. But what you'll be then looking at is, how does the device do as compared to Impella on adverse events for access closure and safety to the valve, because the concept and the indication of high-risk PCI has already been awarded to Abiomed through Impella. So it really will be then comparing the differences between the two devices and their ability to maintain hemodynamics. That being said, I think we're ahead of everyone's timeline from what people thought was going to happen with ECP. That has to do with great execution by the team, great collaboration by the FDA, and a real demand and interest by our customers to have a true nine French device for high-risk PCI.

Great, thanks. I'm going to squeeze one last one in and just you gave some statistics around Impella Connect, the 600 sites there that are currently using that feature. Is there anything you can offer in terms of utilization in those sites that have adopted that cloud based architecture versus those that haven't, are you seeing more pumps in those being used?

So Raj, it's hard to kind of just compare it because you're biased in that our top center started first, but historically yes, we've seen more usage and most important, we've seen better outcomes and we've seen less certain user errors. So historically, if a site had our support and then got Impella Connect, we always saw a bump in outcomes, partly because it was more collaborative and we were working with them, partly because they knew they had access to real-time information. And what's new is, we're able to help with identification of right heart failure, which obviously sometimes can be a something that can be fatal for the patient and may not get picked up early. So we're now utilizing the software and suction alarms and looking at patterns to be able to predict or look at right heart failure. So we're excited about it. Again, most important, it's improving outcomes and ease of use and that is what drives a technology to be the standard of care.

Great, thank you.

Thanks, Raj.

Thank you. Our next question comes from the line of Matthew O'Brien from Piper Sandler. Your line is now open.

Good morning. Thanks for taking the questions. Just I guess, Mike for starters on 5.5 that number in the quarter was obviously very strong. Can you talk about any stacking that went on versus utilization? And then more importantly, what can 5.5 do from a growth trajectory perspective maybe over the next couple of quarters just on its own and then potentially bringing other interventionalists in to use CP or RP or whatever it may be this year and even into next year?

It's a good question Matt, let me walk you through. So the 5.5 is smaller and thinner than the 5.0. It's a new technology platform and also has a sensor on it. So it's actually easier to place through the axillary artery or if the chest is open, for a patient coming off a heart-lung machine after open heart surgery, they can drop it in direct, and it's designed for surgeons. And so there's a huge demand for a minimally invasive weanable full pump and that's what the Impella 5.5 is. Part of that new population that we can treat with it is this acute-on-chronic patient population. So we estimate conservatively, there's another 100,000 of these patients in the U.S. that's a subset of the, almost 2 million Class 3 and Class 4 patients. So that's an exciting component. Now we are opening new centers, but we don't tend to put a lot of inventory on the shelf because we don't do consignment, and we are seeing just a strong growth in utilization overall. And most important, we're seeing the best outcomes historically documented for acute-on-chronic heart failure patients. Anecdotally, we've even had patients that have been on extended support and seen recovery of their kidneys, so those are exciting trends. And then from an overall perspective, if your -- second part of your question is working back and forth with interventional cardiologist, we do see our top centers, the Cedars, the Cleveland Clinics, the Northwestern, the Tops, I can go around the country, top heart hospitals, where they combined and they partner as a heart team. The COVID trend that we're seeing in 2020 is there's more surgical turndown patients going to the Cath lab. So we want to collaborate that heart team approach, so that you can do a protective PCI, reduce the length of stay for the patient, reduce having to stage the patient for two procedures, so that's a good benefit. We also see the benefit of escalating those acute-on-chronic patients or those AMI shock patients that need more on the left side and will have more of a longer duration of wait, where they're going to want to get up and walk around. So that's worked well, but in order to anticipate and collaborate and promote that more, we've created a distribution designated for the heart surgeons in heart failure and we've actually also added a heart failure physician in the company as well. So we're excited now for that next opportunity of those acute-on-chronic patients. We also think that the unloading will have a profound impact on both acute and chronic renal failure for some of these patients and we do see this benefit. We see this heart team collaboration.

Matt, if I could just in and add a few numbers, as we started opening it up to 5.5 sites in Q3 of last year, so we opened up 26 sites last year, so obviously we opened up a few more, a little, 10 or 11 more this quarter. So most of that I would say the growth in the 5.5 is coming from patient utilization. I mean, also a little bit from site openings, but most of it is coming from patient utilization.

Okay, really helpful, I appreciate that. And then Mike, I know there's a lot going on in between now and BTR with sheaths and ECP, but your comment on, I think you said first in man a year from now is interesting to me. Is there any way just generally speaking, to frame up the process of studying that pump and how long it's going to take and what are you going to compare it to an LVAD or anything along those lines, because that's obviously an enormous new patient population for you. So the comment that you're getting close to first in man there is compelling to me, so I'd just love to hear a little bit more about that.

Sure. Matt, the 5.5 allows us to treat cardiomyopathy shock patients, those acute-on-chronic. So these are heart failure patients that have worn out hearts, as compared to a patient that has a first symptom of a heart attack, going into shock and ending up in the cath lab where they're going to open the blocked artery. So this is more of that heart failure population and we feel very confident that extended unloading has a benefit. Now the Impella 5.5 is not labeled for six months of use even though we've had patients go a long period of time, and in the engineering labs, it will run consistently for more than 500 days, but you have to stay at the hospital. So it's really testing the benefit of unloading and we do see benefit in four to five and six weeks of unloading. For the BTR, you're now talking about something that can do a similar type of unloading and if -- remember it is an LVAD, but unlike today's LVAD, you don't have to do a sternotomy, you don't core out the left ventricle, the apex of the heart and take out the muscle fiber and deplete coronary flow. The device goes across the valve and pumps with the heart, so it's ideal to wean off. And with the sensors, we're able to see what's happening to the patient and wean off appropriately or optimally looking at wall tension. The other exciting thing is, there's future adjunctive therapies, whether it's Entresto, which is a great drug, whether it's stem cells or other things to come in a duration of unloading through the axillary artery combined with other things, we believe is going to get a lot of these heart failure patients back. The opportunity is enormous, because it's really going to target the Class 3 population that hasn't fallen off the cliff yet and become Class 4. And there's tremendous new science coming around the benefits of unloading, as well as some of the hormonal connections between the kidneys, so more to come on that from a timeline. We'll wait and see, but we already have patients that are going on devices for extended period inside and outside the U.S. And while we're not approved for bridge to transplant, based on you know, many of them will get a transplant in three to four weeks and they go right on to a transplant with a virgin sternum. They've been up and walking around because it's implanted through the axillary in the shoulder and it really opens up now an opportunity for chronic heart failure that hasn't been out there before.

Got it, exciting. Thank you.

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

Thanks. Hey guys. First, I was hoping you could update us on expected approval timing for the CP compatible XR Sheath. I thought I heard you say that you were working on both the 510(k) and a PMA supplement for that product, so some clarity on the regulatory path there would be helpful too?

Chris, the Impella 2.5 is the only device that has the XR Sheath 510(k) cleared on it and we're not doing anything different to the pump itself. With the Impella CP, we will pre pursuing the XR Sheath with a 510(k) clearance, but we also will continue to enhance the product to make that even a better device. So when we change the Impella components or change anything on the Impella CP, that's a PMA supplement and you should expect that will be done in parallel and you should expect that will continue over an extended period of time.

Okay, but when you're going to be able to have the XR Sheath compatible with the CP is that still targeted for early FY '22?

It’s probably more the second half, but again there'll be other things coming on top of it. So we're going to go after both. So you should first see an XR Sheath clearance and then you'll also see some changes to the product that make that product work better with the XR Sheath and those will be PMA supplements, which should start in the second half of next fiscal year.

Okay, and then Todd, I don't think I heard the breakdown between high-risk PCI and shock in the U.S. this quarter. I'm just curious, given the ebb and flow with COVID headwinds, whether there was differential performance between the two segments of the business?

Yes, Chris, good question. I think for high-risk PCI in the quarter, it was relatively flat and from AMI cardiogenic shock, it was down 2%. One thing to point out, I mentioned in my prepared remarks, cardiogenic shock had a really strong October last year were I think up over 30% for the month of October, and so some of it is just more constant analysis. And then obviously, we had from a high-risk PCI standpoint a little bit of the impact last November, December from AHA. So I think it's more of a comp issue than anything else, Chris at this point in time.

That's helpful. Thanks.

Thank you. Our next question comes from the line of Danielle Antalffy from SVB Leerink. Your line is now open.

Hey, good morning, guys. Thanks so much for taking the question. Todd, just a question for you on guidance. Just wanted to see if we could get some color from you around what's reflected at the low end and the high end as it relates to COVID recovery? And then I have one follow up on margin.

Sure. Thanks for the question, Danielle. So normally, as you know, we don't provide quarterly guidance and we're just trying to be transparent with investors as much as we can in this uncertain environment. So as I mentioned in my prepared remarks, I mean, we do continue to see COVID resurgence impacting the pace of recovery, especially in January across, I would say, mostly U.S. and Europe. So however, as we've seen in the past, when we see patiently utilization impacted, we normally see recovery, again, although at the time it is tough to call, so at the low end of my range, 9%. We did assume that we see a slower pace of recovery throughout the quarter from where we are today. The high end of the range 14% assumes some of these impacts in cities and regions snap back a little bit quicker and we get to that 14%. So that's really consistent with my guide last quarter, it's low end is slow recovery, higher end it becomes back a little bit faster in the quarter.

Okay, that's helpful. And then my next question on margins, you guys have been doing a great job on the margin side of things, another quarter of really strong operating margin. And you are investing more and you have been. And I guess I'm just curious, as you start to revamp revenues, as we get out of COVID hopefully sooner versus later, how to think about the operating leverage going forward, particularly since you've been investing even during this time have been able to deliver strong operating margins? Thanks so much.

Yes, Danielle. So I think as you -- as I look at like next quarter and the quarter beyond, I think we'll continue to see the absolute dollar increase our OpEx with revenue. As you think about next quarter, for example, we do typically see higher payroll taxes and fringe as the calendar year starts over. And we're going to continue to invest in R&D. And so I think we should stay somewhere in that 15% of sales as our clinical trials begin to ramp like STEMI and P IV. And we continue investing in new products like Breethe, and BTR, in the Sheath, and ECP. So I think as you go forward, you'll see our OpEx creep up. We'll continue to spend more, I would say on physician education, CAMP PCI, and more marketing programs. So I think you'll see it bounce up a little bit over the next couple of quarters. And that's all I could say at this point in time. We'll provide more color obviously at our next call with regard to margins for the next fiscal year.

Thank you.

Thank you. Our next question comes from the line of Jayson Bedford from Raymond James. Your line is now open.

Hi, good morning. Just a couple of quick questions. Can you help us reconcile the growth in Europe, meaning procedure growth versus dollar growth? And I guess maybe Todd, could you quantify the FX impact there? And was there any stocking related to the revenue growth in Europe?

Yes, Jason good question. I would say from overall, Europe grew 12% on a reported basis from an off FX perspective. On an organic basis, it was closer to 4%. So we had a pretty big tailwind from FX last year, year rate was around 111 versus average of 119 for the quarter. So I would say about, 8 points were due to FX. So patients were up in the, like I said, mid single digits, high-risk PCI was up 4%, shock was up 6% and I would say that's sort of the reconciliation. We saw some nice performance, I would say, out of Switzerland, Germany, Italy, continuously, I would say patient growth in those areas. And they were being offset by some of the hardest hit countries like UK, France and in Belgium, which were down obviously double-digits. So, a little bit of uneven growth over in Europe, but overall pretty strong growth overall, when you think about, with COVID and what's going on over there.

Okay. And then you mentioned the 48% growth in your surgical business. You give us a lot of metrics, I don't want to be greedy here, but is there any way that you could give us an approximate size of that surgical business or maybe just even the split between 5.0 and 5.5 in the U.S.?

Yes. I mean, the split is about 15% of our business, Jason and I can -- and without getting into the details, I will tell you that the 5.5 is growing over 300% and the 5.0 is declining. So it's 5.5 becoming a bigger part of our business today and we expect that to continue as we go forward.

Excuse me, the 5.5 contribution bigger than the 5.0 contribution?

Yes, it is.

Okay, thank you.

Thank you. Our next question comes from the line of Chris Cooley from Stephens. Your line is now open.

Thank you. Good morning. I appreciate you taking the questions. A lot of great detail this morning, and I appreciate the transparency or the added transparency, I should say here as we go into the fiscal year end. But Todd, I guess my first question just simply on the guidance to talk about your expectations there, when we think about the surgical franchise versus high-risk PCI. Should we kind of, are we looking for similar trends here in the fiscal 4Q, where the growth is really being driven by these great outcomes you're achieving in the shock population, as well as with the growth in the RP in conjunction with treatment of COVID-19? And I just had a quick follow up.

So Chris, I want to make sure I just understand your question. Is it more around what do we expect in Q4 from a growth by surgical versus high-risk versus cardiogenic shock?

I'm really just trying to look at the mix hear, basically going forward to the fiscal 4Q, obviously getting a good benefit from growth in the 5.5, I'm just trying to think about when we see a reacceleration in the kind of Abiomed or old Abiomed type growth and the high-risk PCI segment as well.

Well, I think the mix of business that we saw in really in Q3 will continue into Q4 without getting into details by product, but expect to see another strong quarter out of our surgical business, both the 5.5 in RP and the 5.0, so I expect to see our surgical business continue to perform well. And, we do expect to see ultimately at the end of the day high-risk PCI in cardiogenic shock snapped back from where we are right now and get better in February and March.

Understood. And then may be just quick clarification here, Mike in your prepared comments at the outset you mentioned direct to consumer marketing, both on the TV side as well as through digital media. Just was trying to get a better feel for the scope of that kind of how that would roll out and why now? Thanks so much.

Thanks Chris for the question. We have had selected commercials over the years, where we align them with protected PCI centers. What we're doing now is really more of a general awareness campaign where we're partnering with the local hospitals. We're talking to the society specifically SCAI, the Interventional Cardiology Society and the Chairman of SCAI is Dr. Cindy Grimes. And so she has given several talks on the benefits of treating these essential patients and the need. SCAI also conducted a survey, a national survey, and it showed that patient anxiety was keeping people from going to the hospital. One of the points was 51% of the people in the survey did not feel comfortable scheduling a medical procedure during COVID-19. So we're running these commercials. We're getting positive feedback, both from the hospitals, our customers, because again, they are general awareness, but allows us then to connect those patients that need to be treated. And to be clear, our high-risk PCI patients are not elective, they're essential. They're classified by CMS and by the society as essential because these people are having chest pain. In many cases, they're admitted to the hospital. And what I would remind our investors that we try to be so transparent and give you as much detail as we can on our patients, there is a gray area between a high-risk PCI patient an urgent patient that has non-STEMI, that's admitted to the hospital to be compensating. And someone having an AMI going into shock because of a blockage or because of a virus, so that we always give you the top numbers, we try to break it down, but there's certainly now a blending of all of those together. And again, these people need to be treated and they have a higher mortality rate if they're not treated. And so that's what the message is for, but we have stepped it up and we're going to maintain it into the next fiscal year, because we think it's very helpful overall.

Thank you.

Thank you. Our next question comes from the line of Marie Thibault from BTIG. Your line is now open.

Hi, good morning. Thanks for taking the questions. Just one sort of high level question for you here to start. As we think about Abiomed 2.0's movement into the green phase here, is it fair for us to think about post-COVID, Abiomed being able to return to sort of the mid teens procedure growth we were seeing in the U.S. before some of the disruption in late calendar year 2019, just want to get kind of a feel for how you're thinking about ex-COVID performance?

That's a good question and a normal question. So first of all, what we want to do is we want to outperform the rest of our peers. So we want to have positive growth, and then the best metrics on gross margin, operating margin and of course, some of the best clinical data coming in and pursuing new indications, new products. So we've got lots of catalysts. And as that happens, we will maintain a lot of the benefits that we implemented during COVID with Abiomed 2.0, things that make us better at training, education, regulatory submissions, clinical studies. And we do think we will have a lot of catalysts, catalysts on the ECMO which is new, catalyst on some new indications going after this acute-on-chronic heart failure population. We'll be collecting more data and submitting for VT ablation in the EP lab and then of course, we've got the XR Sheath that helped minimize access closure concerns. We also just have regular education on access closure, showing that the rates now for bleeding and vascular complications can be below 2% with training, and then you have the ECP, RP growth, 5.5 and then you also have some new countries. So we're excited and we believe that we will maintain that top tier growth formula and we think that today we're a much better company because of COVID and we'll get the benefits of Abiomed 2.0 in fiscal '22 and beyond.

That makes sense, Mike. Thank you for that and obviously I'll hang on for fiscal '22 guidance. I'm trying to be patient there. One follow up then on international. The trend around Japan looks to be sustainable given all the data drivers you have going on there and some of the best practices that are being put to, implemented there. So I wanted to check if that made sense as a sustainable kind of growth driver going forward? And then see if I could get detail on the new countries that Abiomed is eying next. Thank you.

So Marie, you're correct. I mean, Japan had now really strong quarter at over $12 million of revenue up 38%. Most of that was driven by patients, patients were up 37% in the quarter. So, again, we've opened up 156 sites, we still have another, up to another 350 to get into. So we do expect to see a long, sustainable growth in Japan again. For us where it's about getting the best patient outcomes, so we can have -- be the standard of care there for the next 10 years. So we're very excited about our performance in Japan and more to come in that area. In terms of countries outside, it's, the next one is always tough to call, right? We are planting seeds in a lot of different countries around the world, if you think about Singapore and Hong Kong and India and the Middle East, and they are just a variety of them. And so, the gating item for us in these countries is reimbursement. So we'll typically go into these countries work with some of the key opinion leaders, work with the physician societies. And just it's a long sales process. So it's hard to call, but we are planting a lot of seeds. And we still have a lot of growth to go, O.U.S., besides, our top three countries that we're focused on, which are, Germany, U.S. and Japan.

Thank you for that Todd.

Thank you.

Thank you. Our next question comes from the line of Margaret Kaczor from William Blair. Your line is now open.

Hi, good morning, everyone. Thanks for squeezing me in here. One of the - maybe follow up a little bit about the cloud and the real time monitoring that you guys referenced on the front end of the call. So number one, I know at this point, you guys are sort of giving away the connective system, but how frequently can we expect new software launches for the program and would you charge for some of those new features? And then I guess more specifically, if we look at calendar 21, what kind of updates should we look for? Whether kind of just generic or more predictive algorithms?

Margaret, thanks for the question. And just to clarify, sometimes it's a confusing thing for some investors is, SmartAssist all the software we have on the system itself allows us to when we log in to see that and to utilize that and talk to the physicians about that it helps us predict things such as, potential right heart failure. Impella Connect, once that information is in the cloud, and it's streaming, it allows us to do artificial intelligence and collect the data. And so that can be done at a quicker pace. That means on some of those tools, we can do it from our phone or iPad, we don't have to go out to every single center and log and add that software to all the consoles. And so the analogy I give is smartest, this is COBRA Kai and Impella Connect is Netflix. And so, we're going to strike hard, and we're going to try to do everything we can at the hospital bedside with SmartAssist, but the ability for artificial intelligence to take data from all over the world on our patients, and match it with outcomes to X plan will give us tools in the future that we may add for, may add to charge for, but currently, because of COVID, everything is given away all the hardware has already been put in our cost of goods. That's why we have 500 sites, we just have to turn on the WiFi. And we know that making ease of use and better outcomes is the formula for success, is the formula for adoption. Longer term, we will have some new models. For AI, we might have new models guaranteeing certain outcomes, whether it's improved EF for high-risk PCI or reduction of readmissions for high-risk PCI for maybe even better outcomes. And if someone commits to follow the protocols and import that data, we can provide more of these AI tools. So it's a lot of opportunity, we already have a very good gross margin, we're already profitable. So we're going to do things that make the best sense for the patient and our customers. Because again, we believe we're going to be the standard of care, for high-risk PCI and shock in the short term, and then we're going to expand on all these other indications later.

Okay, so it's like a follow up on that. And then that in the follow up question. So number one, should we assume kind of new updates, specifically over a four quarter period and doesn't matter? I guess, do you need new add-ons, new shows to add on to the system and then as you're thinking about launching some of this, is it about convincing new clinicians in the accounts to use the system? Or is it about expanding the number of patients currently existing trained clinicians at expanding number of patients they use Abiomed. Thanks.

Margaret. Our strategy number one is to make our team more productive and flexible and get better outcomes for the patients. So you can imagine in a COVID environment with restrictions, it's a pretty great tool, when our clinical rep in the field all of a sudden gets a text. And it tells him that there's a patient on support at this hospital, they can click on the button and they can see the console immediately and watch how the patient's doing. So as they drive to the hospital or as they get a call from their physician, in real time, they're looking at what's happening. So that's, the big part. AI is certainly gaining a lot of traction in the medical community. Really, the only challenge is people that have cybersecurity concerns. And what we do is we explain to them that the Impella Connect and our software is FDA approved, is HIPAA compliant. It's a one way transmit out so that it's not hackable back in. And we just got to continue to work with them. And it allows us to really do a great job of connecting their outcomes with their questions. And on the same Impella Connect portal, we can look up a patient we meaning a physician, we can look up how they've done in the past, what type of patients we can look up hospitals, it gives us a level of information that allows us to help them improve their outcomes. And that's the key to this tools in the software. It's really ease of use and better outcomes. But the level that we go down is to start with our benefit to our people, benefit to the physicians, and we just have to overcome a little bit of the IT fear at the hospital.

Got it, thanks, guys.

Thanks, Margaret.

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Mike Minogue, President, Chairman and CEO for closing remarks.

Thanks for your time today. I would like to remind our investors that our corporate pitch is on our website where it advances the slide automatically, also for the clinical data that I discussed today in my script, those slides are posted on our website and we appreciate your time. Have a great week.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.