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Abiomed Announces Q4 FY 2020 Revenue of $207 Million and 28.1% Operating Margin

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FY 2020 Annual Revenue of $841 Million, Up 9%, and 29.6% Operating Margin

Abiomed, Inc. (NASDAQ:ABMD), a leading provider of breakthrough heart support technologies today reported fourth quarter fiscal 2020 revenue of $206.7 million compared to revenue of $207.1 million for the same period of fiscal 2019. For fiscal year 2020, total revenue was $840.9 million, up 9% compared to revenue of $769.4 million, and operating income was $249.2 million, up 10.9% compared to operating income of $224.8 million in fiscal year 2019.

Recent financial and operating highlights include:

  • Worldwide Impella® heart pump revenue for the quarter totaled $197.4 million, a decrease of 1% compared to revenue of $199.5 million during the same period of the prior fiscal year. Worldwide Impella heart pump revenue was impacted by lower patient utilization due to the negative impact of two misleading publications in print within the quarter, primarily in US and Germany. The Company was beginning to see positive momentum in March based on our actions to educate the medical community on Impella FDA studies and new publications. In the second half of March, the COVID-19 pandemic drastically impacted patient utilization. Within the quarter, the company estimates COVID-19 had approximately a $17 million negative impact on revenue. Full year worldwide Impella heart pump revenue totaled $806.8 million for fiscal 2020, an increase of 9% compared to revenue of $741.7 million for the prior fiscal year.
  • U.S. Impella product revenue for the quarter totaled $164.0 million, a decrease of 3% compared to revenue of $169.7 million during the same period of the prior fiscal year with U.S. patient usage of the Impella heart pumps down 5% due primarily to the impact of COVID-19. Within the quarter, the company estimates COVID-19 had approximately a $15 million negative impact on U.S. Impella product revenue. Full year U.S. Impella revenue totaled $674.4 million, up 5% compared to $639.3 million in the prior fiscal year with U.S. patient usage of the Impella heart pumps up 6%.
  • Outside the U.S., Impella product revenue for the quarter totaled $33.4 million, an increase of 12% compared to revenue of $29.8 million during the same period of the prior fiscal year. Outside the U.S. revenue, specifically Europe, was negatively impacted by COVID-19 in the quarter. Full year Impella product revenue outside the U.S. totaled $132.4 million, an increase of 29% compared to $102.4 million in the prior fiscal year. Specifically, Japan revenue was $8.4 million for the quarter and $35.2 million for the year, up 55% and 101%, respectively, compared to prior fiscal year.
  • Gross margin for the fourth quarter of fiscal 2020 was 80.9% compared to 83.2% during the same period of fiscal 2019. For the full fiscal year 2020, gross margin was 82.0% compared to 83.2% in fiscal year 2019.
  • Operating income for the fourth quarter fiscal 2020 was $58.1 million, or 28.1% operating margin, compared to $65.4 million, or 31.6% operating margin in the same period of fiscal 2019. For the full fiscal year 2020, operating income was $249.2 million, or 29.6% of revenue, compared to $224.8 million, or 29.2% of revenue in the prior fiscal year.
  • Fourth quarter fiscal 2020 GAAP net income was $31.8 million, or $0.70 per diluted share, which includes a $13.6 million, or $0.30 per diluted share, unrealized loss on our investment in Shockwave. This compared to GAAP net income of $74.0 million or $1.60 per diluted share for the prior fiscal year, which benefited from a $23.6 million, or $0.51 per share, unrealized gain on our investment in Shockwave.
  • Full fiscal year 2020 GAAP net income was $203.0 million, or $4.43 per diluted share, which benefited from $14.8 million, or $0.32 per diluted share, of excess tax benefits related to employee share-based compensation awards recorded as a reduction of income tax expense. This compared to GAAP net income of $259.0 million or $5.61 per diluted share for the prior fiscal year, which benefited from $69.3 million, or $1.50 per diluted share, of excess tax benefits related to employee share-based compensation awards recorded as a reduction of income tax expense and a $23.6 million, or $0.51 per diluted share, unrealized gain on our investment in Shockwave.
  • The company generated operating cash flow of $86.6 million in the fourth quarter and $314.9 million for the full fiscal year 2020. As of March 31, 2020, the company had $650.9 million of cash and marketable securities and no debt.
  • The study, by Al-khadra, et al., published in the February 15, 2020 print edition of Catheterization & Cardiovascular Interventions. The study of 21,848 non-emergent, high-risk patients who underwent percutaneous coronary intervention (PCI) with percutaneous ventricular assist devices (PVADs), including Impella, demonstrates the PVAD patients had a lower rate of mortality (6.1% vs. 8.8%, p= <.001), lower vascular complications (4.3% vs. 7.5%, p= .046), lower cardiac complications (5.6% vs. 14.5%, p= <.001), lower respiratory complications (3.8% vs. 9.8%, p= <.001) and a similar rate of bleeding (2.7% vs. 2.8%, p= .581) than patients who underwent PCI with intra-aortic balloon pumps (IABPs). This publication also noted that PVAD patients had a shorter length of stay than IABP patients (4 days vs. 5 days p= <.001).
  • On March 25, the company announced numerous steps taken to aid the global medical community and contribute to improved patient care during the COVID-19 outbreak. During these challenging times, Abiomed has focused our Patients First mission on three guiding priorities: clinically supporting patients and physicians on-site, on-call and online, manufacturing and supplying Impella heart pumps to hospitals and keeping our employees and their families healthy and safe. The company has also donated more than 100,000 masks and other PPE equipment to hospitals in the U.S., Europe and Japan in need and will continue to do so as the COVID-19 pandemic continues.
  • On April 29, the company announced the acquisition of Breethe, developer of a novel extracorporeal membrane oxygenation (ECMO) system that will complement and expand Abiomed's product portfolio to serve the needs of patients whose lungs can no longer provide sufficient oxygenation, including patients suffering from cardiogenic shock, cardiac arrest or respiratory failure such as due to ARDS, H1N1, SARS, or COVID-19. Additionally, ECMO has also been utilized as a primary method of oxygenation and hemodynamic support for pediatric patients. Breethe has applied for 510k clearance by the Food and Drug Association (FDA). Terms of the acquisition are not being disclosed at this time.
  • The company is taking proactive actions to mitigate the business impact of COVID-19 to better match expenses to revenue in Q1. These actions taken include a hold on hiring, eliminating non-critical consultants, contractors, and temporary workers, reducing discretionary spending and implementing alternate work schedules for the Aachen and Danvers production teams. The CEO and COO have reduced their salaries by 100%, VPs and directors have reduced their salaries by 50% and 20% respectively for the first quarter. The Board of Directors have also reduced their cash retainers by 50% for Q1. Non-director employees at Massachusetts and German headquarters will be taking a minimum of one-week furlough or unused vacation. The commercial field team will work on monthly operating plans to allow for flexibility and the potential to increase sequentially each week. These actions are designed to preserve full-time jobs, preserve cash returns and retain the ability to quickly ramp up when demand returns, while at the same time continuing to invest in innovation. These cost actions are intended to last through Q1, but the company will continue to monitor the environment and extend these actions, if necessary.

"Everyone at Abiomed would like to express our thanks to the frontline healthcare workers and medical community for all they are doing to support patients and provide much needed medical care. Also, I appreciate our employees who continue to directly support patients 24x7 at hospitals and our headquarters manufacturing, service and shipping teams who continue to come to work to make and ship our Impella heart pumps," said Michael R. Minogue, Abiomed's Chairman, President and Chief Executive Officer. "We will endure the challenges and come out stronger as Abiomed 2.0 because of the investments in innovation to have products that are smaller, smarter, and more connected in the cloud with AI algorithms for heart recovery."

FISCAL YEAR 2021 OUTLOOK

The COVID-19 pandemic has resulted in customers diverting resources to treat COVID-19 patients and deferring cardiac procedures. Due to the uncertain scope and duration of the COVID-19 pandemic and the timing of economic recovery, the company will not be providing full year revenue or operating margin guidance at this time. The company will analyze and monitor this dynamic environment and will provide an update on guidance when appropriate.

Due to the current situation on social distancing, we will not be hosting a full investor day in person at our headquarters on May 27th. However, we will be hosting a condensed, virtual investor event focused on our innovation, clinical data and our ECMO acquisition on the same day. Details will be forthcoming.

EARNINGS CONFERENCE CALL DETAILS

The company will host a conference call to discuss the quarterly and full year results at 8:00 a.m. EST on Thursday, April 30, 2020. The conference call will be hosted by Michael R. Minogue, Chairman, President and Chief Executive Officer and Todd A. Trapp, Vice President and Chief Financial Officer.

To listen to the call live, please tune into the webcast via https://edge.media-server.com/mmc/p/gfyn6zsu or dial (855) 212-2361; the international number is (678) 809-1538. A replay of this conference call will be available beginning at 11:00 a.m. EST April 30, 2020 through 11:00 a.m. EST on May 7, 2020. The replay phone number is (855) 859-2056; the international number is (404) 537-3406. The replay access code is 7361069.

ABOUT ABIOMED

Based in Danvers, Massachusetts, USA, Abiomed, Inc. is a leading provider of medical devices that provide circulatory support. Our products are designed to enable the heart to rest by improving blood flow and/or performing the pumping of the heart. For additional information, please visit: www.abiomed.com. Abiomed, Impella, Impella 2.5, Impella 5.0, Impella LD, Impella CP, Impella RP, Impella 5.5, Impella Connect, and SmartAssist are registered trademarks of Abiomed, Inc., and are registered in the U.S. and certain foreign countries. Impella BTR, Impella ECP, CVAD Study, DTU STEMI Study, and Automated Impella Controller are pending trademarks of Abiomed, Inc.

FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements, including, without limitation, statements regarding development of Abiomed's existing and new products, the company's progress toward commercial growth, and future opportunities and expected regulatory approvals. All statements, other than statements of historical facts, may be forward-looking statements. These forward-looking statements may be accompanied by such words as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "project," "target," "should," "likely," "will" and other words and terms of similar meaning. The company's actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors, including, without limitation: the scope, scale and duration of the impact of the COVID-19 pandemic, the company's dependence on Impella® products for all of its revenues; the company's ability to successfully compete against its existing or potential competitors; the acceptance of the company's products by cardiac surgeons and interventional cardiologists; long sales and training cycles associated with expansion into new hospital cardiac centers; reduced market acceptance of the company's products due to lengthy clinician training process; the company's ability to effectively manage its growth; the company's ability to successfully commercialize its products; the company's ability to obtain regulatory approvals and market and sell its products in certain jurisdictions; enforcement actions and product liability suits relating to off-label uses of the company's products; unsuccessful clinical trials or procedures relating to products under development; the company's ability to maintain compliance with regulatory requirements; the failure of third-party payers to provide reimbursement of the company's products; the company's ability to increase manufacturing capacity to support continued demand for its products; the company or its vendors' failure to achieve and maintain high manufacturing standards; the failure of the company's suppliers to provide the components the company requires; the company's ability to expand its direct sales activities into international markets; the outcome of ongoing securities class action litigation relating to our public disclosures, the company's ability to integrate acquired companies into its operations and other risks and challenges detailed in the company's filings with the Securities and Exchange Commission (the "SEC"), including the most recently filed Annual Report on Form 10-K and the filings subsequently filed with or furnished to the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this release. Unless otherwise required by law, the company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this release or to reflect the occurrence of unanticipated events.

Abiomed, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

March 31, 2020

 

March 31, 2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

192,341

 

 

$

121,021

 

Short-term marketable securities

 

 

250,775

 

 

 

370,677

 

Accounts receivable

 

 

84,650

 

 

 

90,809

 

Inventories

 

 

90,088

 

 

 

80,942

 

Prepaid expenses and other current assets

 

 

18,009

 

 

 

13,748

 

Total current assets

 

 

635,863

 

 

 

677,197

 

Long-term marketable securities

 

 

207,795

 

 

 

21,718

 

Property and equipment, net

 

 

164,931

 

 

 

145,005

 

Goodwill

 

 

31,969

 

 

 

32,601

 

In-process research and development

 

 

14,913

 

 

 

15,208

 

Long-term deferred tax assets, net

 

 

43,336

 

 

 

77,502

 

Other assets

 

 

117,655

 

 

 

85,115

 

Total assets

 

$

1,216,462

 

 

$

1,054,346

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

32,774

 

 

$

32,185

 

Accrued expenses

 

 

75,107

 

 

 

57,420

 

Deferred revenue

 

 

19,147

 

 

 

16,393

 

Other current liabilities

 

 

4,857

 

 

 

 

Total current liabilities

 

 

131,885

 

 

 

105,998

Other long-term liabilities

 

 

9,305

 

 

 

1,061

 

Contingent consideration

 

 

9,000

 

 

 

9,575

 

Long-term deferred tax liabilities

 

 

806

 

 

 

822

 

Total liabilities

 

 

150,996

 

 

 

117,456

 

Stockholders' equity:

 

 

 

 

Class B Preferred stock, $.01 par value

 

 

 

 

 

 

Authorized - 1,000,000 shares; Issued and outstanding - none

 

 

 

 

Common stock, $.01 par value

 

 

451

 

 

 

451

 

Authorized - 100,000,000 shares; Issued - 47,542,061 shares at March 31, 2020 and 47,026,226 shares at March 31, 2019

 

 

 

 

Outstanding - 45,008,687 shares at March 31, 2020 and 45,122,985 shares at March 31, 2019

 

 

 

 

Additional paid in capital

 

 

739,133

 

 

 

690,507

 

Retained earnings (accumulated deficit)

 

 

602,482

 

 

 

399,473

 

Treasury stock at cost - 2,533,374 shares at March 31, 2020 and 1,903,241 shares at March 31, 2019

 

 

(265,411

)

 

 

(138,852

)

Accumulated other comprehensive loss

 

 

(11,189

)

 

 

(14,689

)

Total stockholders' equity

 

 

1,065,466

 

 

 

936,890

 

Total liabilities and stockholders' equity

 

$

1,216,462

 

 

$

1,054,346

 

Abiomed, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

March 31,

 

Fiscal Years Ended

March 31,

 

2020

2019

 

2020

2019

Revenue

$

206,658

 

$

207,081

 

 

$

840,883

 

$

769,432

 

Costs and expenses:

 

 

 

 

 

Cost of revenue

 

39,369

 

 

34,848

 

 

 

151,305

 

 

129,567

 

Research and development

 

25,346

 

 

25,548

 

 

 

98,759

 

 

93,503

 

Selling, general and administrative

 

83,891

 

 

81,296

 

 

 

341,600

 

 

321,550

 

 

 

148,606

 

 

141,692

 

 

 

591,664

 

 

544,620

 

Income from operations

 

58,052

 

 

65,389

 

 

 

249,219

 

 

224,812

 

Other (loss) income:

 

 

 

 

 

Investment income, net

 

3,100

 

 

2,769

 

 

 

12,167

 

 

8,166

 

Other (expense) income, net

 

(21,839

)

 

30,372

 

 

 

(4,561

)

 

30,382

 

 

 

(18,739

)

 

33,141

 

 

 

7,606

 

 

38,548

 

Income before income taxes

 

39,313

 

 

98,530

 

 

 

256,825

 

 

263,360

 

Income tax provision

 

7,515

 

 

24,569

 

 

 

53,816

 

 

4,344

 

Net income (A)

$

31,798

 

$

73,961

 

 

$

203,009

 

$

259,016

 

 

 

 

 

 

 

Basic net income per share

$

0.71

 

$

1.64

 

 

$

4.49

 

$

5.77

 

Basic weighted average shares outstanding

 

45,040

 

 

45,091

 

 

 

45,179

 

 

44,911

 

 

 

 

 

 

 

Diluted net income per share (B)

$

0.70

 

$

1.60

 

 

$

4.43

 

$

5.61

 

Diluted weighted average shares outstanding

 

45,575

 

 

46,173

 

 

 

45,816

 

 

46,151

 

 

 

 

 

 

 

(A) Net income includes the effect of the following items:

 

 

 

 

 

Excess tax benefits related to stock-based compensation awards

 

(1,063

)

 

(798

)

 

 

(14,838

)

 

(69,267

)

Unrealized loss (gain) on investment in Shockwave Medical - net of tax

 

13,595

 

 

(23,636

)

 

 

367

 

 

(23,636

)

 

$

12,532

 

$

(24,434

)

 

$

(14,471

)

$

(92,903

)

(B) Diluted net income per share includes the effect of the following items:

 

 

 

 

 

Excess tax benefits related to stock-based compensation awards

 

(0.02

)

 

(0.02

)

 

 

(0.32

)

 

(1.50

)

Unrealized loss (gain) on investment in Shockwave Medical - net of tax

 

0.30

 

 

(0.51

)

 

 

0.01

 

 

(0.51

)

 

$

0.28

 

$

(0.53

)

 

$

(0.31

)

$

(2.01

)

 

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