10-Q

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 29, 2022, 45,460,884 shares of the registrant’s common stock, $.01 par value, were outstanding.

Throughout this quarterly report on Form 10-Q (“this Report”), we refer to various trademarks, service marks and trade names that we use in our business. 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 ECP, Impella BTR, CVAD STUDY, STEMI DTU, Automated Impella Controller, Abiomed Breethe OXY-1 System and preCARDIA are pending trademarks of ABIOMED, Inc. Other trademarks and service marks appearing in this Report are the property of their respective holders.

Throughout this Report, unless the context otherwise requires, “ABIOMED, Inc.,” the “Company,” “we,” “us” and “our” refer to ABIOMED, Inc. and its consolidated subsidiaries.

We make available, free of charge on our website located at www.abiomed.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after filing such reports with or furnishing such reports to the U.S. Securities and Exchange Commission (“SEC”). We also use our website for the distribution of Company information. The information we post on our website may be deemed to be material information. Accordingly, investors should monitor our website, in addition to following our press releases, SEC reports and other filings and public conference calls and webcasts. The contents of our website are not incorporated by reference into this Report.

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial reporting as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and in accordance with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 that has been filed with the SEC.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all normal and recurring adjustments that are necessary for a fair presentation of results for the interim periods presented. The results of operations for any interim period may not be indicative of results for the full fiscal year or any other subsequent period. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from these estimates.

There have been no changes in the Company’s significant accounting policies for the three months ended June 30, 2022 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2022 that has been filed with the SEC.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from these estimates.

COVID-19 Pandemic

The Company is subject to additional risks and uncertainties as a result of the ongoing novel coronavirus (“COVID-19”) pandemic. Since March 2020, the ongoing COVID-19 pandemic has adversely impacted and is likely to further adversely impact the Company’s business and markets, including the Company’s workforce and the operations of its customers, suppliers, and business partners. While the COVID-19 (including new variants of COVID-19) pandemic remains fluid and continues to evolve differently across various geographies, the Company believes it is likely to continue to experience variable impacts on its business.

To ensure the health and safety of its global employees, the Company continues to offer onsite COVID-19 testing and vaccinations in order to maintain a safe working environment. The Company’s proactive testing and vaccination programs have reduced exposure with early detection and enabled its manufacturing facilities to operate at full capacity.

The depth and extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s business, results of operations, financial condition and individual markets is dependent upon various factors, including the spread of additional variants; the availability of vaccinations, personal protective equipment, intensive care unit (“ICU”) and operating room capacity, and medical staff; and government interventions to reduce the spread of the virus. When COVID-19 infection rates spike in a particular region, the Company’s patient utilization volumes have generally been negatively impacted as hospitals face capacity limitations, staffing shortages and some in-patient treatments have been deferred.

While patient utilization increased in the first quarter of fiscal year 2023, sales were impacted by slower than expected improvements in hospital staffing shortages. The Company continues to closely monitor the impact of COVID-19 on all aspects of its business and geographies, including any impact on the Company’s customers, including the ongoing hospital labor shortages, employees, suppliers, vendors, business partners and distribution channels, as well as on procedures and the demand for its products by keeping apprised of local, regional, and global COVID-19 surges (including new variants of the virus).

While the Company cannot reliably estimate the extent to which the COVID-19 pandemic may impact patient utilization and revenues of its products, the Company's focus is to increase patient utilization of its Impella devices. As of the date of issuance of
these financial statements, the extent to which the COVID-19 pandemic may materially adversely affect the Company’s financial condition, liquidity or results of operations is uncertain.

Recently Adopted Accounting Pronouncements

In November 2021, the FASB issued ASU 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” an amendment focused on increasing transparency of government assistance including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. The Company adopted ASU 2021-10 as of April 1, 2022, on a prospective basis, and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Effective

No new accounting pronouncements issued or effective during the period had, or are expected to have, a material impact on the consolidated financial statements.

Note 3. Acquisitions

Acquisition of preCARDIA, Inc.

The Company acquired 100% interest in preCARDIA , Inc. (“preCARDIA”) on May 28, 2021. preCARDIA is a developer of a proprietary catheter and controller that is expected to complement the Company’s product portfolio to expand options for patients with acute decompensated heart failure (“ADHF”). The preCARDIA system is uniquely designed to rapidly treat ADHF-related volume overload by effectively reducing cardiac filling pressures and promoting decongestion to improve overall cardiac and renal function. The Company determined that substantially all of the fair value was concentrated in the acquired in-process research and development asset in accordance with ASC 805 Business Combinations. As such, the acquisition was accounted for as an asset acquisition.

The Company acquired preCARDIA for a purchase price of $115.2 million. The purchase price included cash consideration of $82.8 million for the remaining interest in preCARDIA, paid to the selling shareholders and for transaction costs associated with the acquisition, and $32.4 million representing the Company’s previously owned minority interest in preCARDIA. The Company recognized a gain of $21.0 million related to its previously owned minority interest in preCARDIA within the condensed consolidated statement of operations for the three months ended June 30, 2021.

In connection with the acquisition, the Company acquired net assets of $115.2 million, which included $115.5 million related to the fair value of the in-process research and development asset and $0.3 million for net liabilities assumed. Since the acquired technology platform is pre-commercial and has not reached technical feasibility, the cost of the in-process research and development asset was expensed, resulting in a charge of $115.5 million to the condensed consolidated statement of operations for the three months ended June 30, 2021. In connection with the acquisition, the Company acquired a license agreement, under which there is a potential payout of $5 million based on the achievement of a commercial milestone.

Note 4. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the treasury stock method by dividing net income by the weighted average number of dilutive common shares outstanding during the period. Diluted shares outstanding is calculated by adding to the weighted average shares outstanding any potential dilutive securities outstanding for the period. Potential dilutive securities include stock options, restricted stock units, performance-based stock awards and shares to be purchased under the Company’s employee stock purchase plan.

For purposes of the diluted net income (loss) per share calculation, potential dilutive securities are excluded from the calculation if their effect would be anti-dilutive. As such, basic and diluted net loss per share are the same for periods with a net loss.

The Company’s basic and diluted net income (loss) per share were as follows:


	For the Three Months Ended June 30,
	2022		2021
Net income (loss) per share – basic	(in thousands, except per share data)
Net income (loss)	$	54,554	$	(26,525	)

Weighted average shares – basic		45,575		45,311

Net income (loss) per share – basic	$	1.20	$	(0.59	)


	For the Three Months Ended June 30,
	2022	2021
Net income (loss) per share – diluted


Delaware		04-2743260
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	ABMD	The NASDAQ Stock Market LLC


PART I - FINANCIAL INFORMATION:			Page

Item 1.	Condensed Consolidated Financial Statements (unaudited)	3

	Condensed Consolidated Balance Sheets as of June 30, 2022 and March 31, 2022	3

	Condensed Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2022 and 2021	5

	Condensed Consolidated Statements of Stockholders’ Equity for the three months ended June 30, 2022 and 2021	6

	Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2022 and 2021	7

	Notes to Condensed Consolidated Financial Statements (unaudited)	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

Item 4.	Controls and Procedures	31

PART II - OTHER INFORMATION:

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

Signatures		34


	June 30, 2022			March 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	180,492		$	132,818
Short-term marketable securities		663,829			625,789
Accounts receivable, net		91,102			90,608
Inventories, net		95,373			93,981
Prepaid expenses and other current assets		29,563			33,277
Total current assets		1,060,359			976,473
Long-term marketable securities		159,876			220,089
Property and equipment, net		198,478			202,490
Goodwill		74,855			76,786
Other intangibles, net		38,168			39,518
Deferred tax assets		17,096			10,552
Other assets		154,804			147,485
Total assets	$	1,703,636		$	1,673,393
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	34,797		$	35,346
Accrued expenses		79,011			72,629
Deferred revenue		23,624			26,362
Other current liabilities		3,330			4,120
Total current liabilities		140,762			138,457
Other long-term liabilities		7,792			9,319
Contingent consideration		18,151			21,510
Deferred tax liabilities		735			781
Total liabilities		167,440			170,067
Commitments and contingencies (Note 15)
Stockholders' equity:
Class B Preferred Stock, $.01 par value		—			—
1,000 shares authorized; issued and outstanding - none
Common stock, $.01 par value		456			455
100,000 shares authorized; 48,382 and 48,258 shares issued as of June 30, 2022 and March 31, 2022, respectively
45,567 and 45,545 shares outstanding as of June 30, 2022 and March 31, 2022, respectively
Additional paid in capital		884,965			870,074
Retained earnings		1,019,066			964,512
Treasury stock at cost - 2,815 and 2,713 shares as of June 30, 2022 and March 31, 2022, respectively		(330,020	)		(304,555	)
Accumulated other comprehensive loss		(38,271	)		(27,160	)
Total stockholders' equity		1,536,196			1,503,326
Total liabilities and stockholders' equity	$	1,703,636		$	1,673,393


	For the Three Months Ended June 30,
	2022		2021
Revenue	$	277,149	$	252,585
Cost of revenue and operating expenses:
Cost of revenue		52,626		45,188
Research and development		40,477		37,708
Selling, general and administrative		117,996		103,484
Acquired in-process research and development		—		115,490
		211,099		301,870
Income (loss) from operations		66,050		(49,285	)
Interest and other income, net		3,772		39,935
Income (loss) before income taxes		69,822		(9,350	)
Income tax provision		15,268		17,175
Net income (loss)	$	54,554	$	(26,525	)

Net income (loss) per share - basic	$	1.20	$	(0.59	)
Weighted average shares outstanding - basic		45,575		45,311

Net income (loss) per share - diluted	$	1.19	$	(0.59	)
Weighted average shares outstanding - diluted		45,922		45,311


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


	Common Stock						Treasury Stock					Additional Paid			Retained		Accumulated Other			Total Stockholders'
	Shares			Par value			Shares		Amount			in Capital			Earnings		Comprehensive Loss			Equity
Balance, March 31, 2022		45,545,438			455			2,713,125		(304,555	)		870,074			964,512		(27,160	)		1,503,326
Restricted stock units issued		105,701			2								(1	)							1
Stock options exercised		18,136			1								1,530								1,531
Return of common stock to pay withholding taxes on restricted stock units		(42,046	)		(1	)		42,046		(10,949	)										(10,950	)
Stock-based compensation expense													13,362								13,362
Stock repurchase program		(60,282	)		(1	)		60,282		(14,516	)										(14,517	)
Other comprehensive loss																		(11,111	)		(11,111	)
Net income																54,554					54,554
Balance, June 30, 2022		45,566,947		$	456			2,815,453	$	(330,020	)	$	884,965		$	1,019,066	$	(38,271	)	$	1,536,196