UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading symbol |
Name of each exchange on which registered |
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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.
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).
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.
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☒ |
Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
As of July 30, 2021,
TABLE OF CONTENTS
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Item 1. |
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Condensed Consolidated Balance Sheets as of June 30, 2021 and March 31, 2021 |
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Condensed Consolidated Statements of Operations for the three months ended June 30, 2021 and 2020 |
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Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2021 and 2020 |
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Notes to Condensed Consolidated Financial Statements (unaudited) |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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EXPLANATORY NOTES
Pending Trademarks and Registered Marks
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 XR Sheath, Impella BTR, CVAD, STEMI DTU, Automated Impella Controller and Abiomed Breethe OXY-1 System are pending trademarks of ABIOMED, Inc. Other trademarks and service marks appearing in this Report are the property of their respective holders.
Company References
Throughout this Report, “ABIOMED, Inc.,” the “Company,” “we,” “us” and “our” refer to ABIOMED, Inc. and its consolidated subsidiaries.
Where You Can Find More Information
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 filings and public conference calls and webcasts. The contents of our website are not incorporated by reference into this Report.
2
PART I. FINANCIAL INFORMATION
ITEM 1: Condensed Consolidated Financial Statements
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
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June 30, 2021 |
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March 31, 2021 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term marketable securities |
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Accounts receivable, net |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Long-term marketable securities |
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Property and equipment, net |
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Goodwill |
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Other intangibles, net |
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Deferred tax assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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Accrued expenses |
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Deferred revenue |
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Other current liabilities |
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Total current liabilities |
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Other long-term liabilities |
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Contingent consideration |
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Deferred tax liabilities |
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Total liabilities |
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Commitments and contingencies (Note 16) |
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Stockholders' equity: |
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Class B Preferred Stock, $ |
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Authorized - |
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Common stock, $ |
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Authorized - |
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Outstanding |
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Additional paid in capital |
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Retained earnings |
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Treasury stock at cost |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
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$ |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
3
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
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For the Three Months Ended June 30, |
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2021 |
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2020 |
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Revenue |
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$ |
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$ |
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Costs and expenses: |
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Cost of revenue |
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Research and development |
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Selling, general and administrative |
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Acquired in-process research and development |
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— |
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(Loss) income from operations |
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( |
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Other income: |
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Investment income, net |
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Other income, net |
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(Loss) income before income taxes |
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Income tax provision |
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Net (loss) income |
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$ |
( |
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$ |
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Net (loss) income per share - basic |
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$ |
( |
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$ |
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Weighted average shares outstanding - basic |
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Net (loss) income per share - diluted |
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$ |
( |
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$ |
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Weighted average shares outstanding - diluted |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
4
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
(in thousands)
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For the Three Months Ended June 30, |
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2021 |
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2020 |
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Net (loss) income |
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$ |
( |
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$ |
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Other comprehensive (loss) income: |
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Foreign currency translation gains |
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Unrealized losses on derivative instrument |
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( |
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( |
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Net unrealized (losses) gains on marketable securities |
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( |
) |
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Other comprehensive (loss) income |
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( |
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Comprehensive (loss) income |
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$ |
( |
) |
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$ |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
5
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except share data)
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Common Stock |
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Treasury Stock |
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Additional Paid |
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Retained |
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Accumulated Other |
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Total Stockholders' |
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Shares |
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Par value |
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Shares |
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Amount |
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in Capital |
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Earnings |
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Comprehensive Loss |
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Equity |
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Balance, March 31, 2021 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
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$ |
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Restricted stock units issued |
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— |
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— |
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( |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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— |
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— |
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Return of common stock to pay withholding taxes on restricted stock |
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( |
) |
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( |
) |
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( |
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— |
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— |
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— |
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( |
) |
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Stock compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive (loss) income |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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Balance, June 30, 2021 |
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$ |
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$ |
( |
) |
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$ |
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$ |
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$ |
( |
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$ |
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Common Stock |
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Treasury Stock |
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Additional Paid |
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Retained |
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Accumulated Other |
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Total Stockholders' |
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Shares |
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Par value |
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Shares |
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Amount |
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in Capital |
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Earnings |
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Comprehensive Loss |
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Equity |
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Balance, March 31, 2020 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
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$ |
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Restricted stock units issued |
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— |
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— |
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( |
) |
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— |
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— |
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— |
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Stock options exercised |
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— |
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— |
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— |
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— |
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— |
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Return of common stock to pay withholding taxes on restricted stock |
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( |
) |
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— |
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( |
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— |
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— |
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— |
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( |
) |
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Stock compensation expense |
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— |
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— |
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— |
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— |
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— |
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— |
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Stock repurchase program |
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( |
) |
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( |
) |
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( |
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— |
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— |
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— |
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( |
) |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance, June 30, 2020 |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
( |
) |
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$ |
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|
The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
6
ABIOMED, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
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For the Three Months Ended June 30, |
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2021 |
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2020 |
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Operating activities: |
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Net (loss) income |
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$ |
( |
) |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Acquired in-process research & development |
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— |
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Bad debt recoveries |
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( |
) |
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( |
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Stock-based compensation |
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Write-down of inventory and other |
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Accretion on marketable securities |
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Change in fair value of other investments |
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( |
) |
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( |
) |
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Gain on previously held interest in preCARDIA |
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( |
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— |
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Deferred tax provision |
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Change in fair value of contingent consideration |
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Other non-cash operating activities |
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Changes in assets and liabilities: |
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Accounts receivable |
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Inventories |
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( |
) |
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( |
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Prepaid expenses and other assets |
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( |
) |
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Accounts payable |
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( |
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( |
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Accrued expenses and other liabilities |
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( |
) |
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( |
) |
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Deferred revenue |
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( |
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Net cash provided by operating activities |
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Investing activities: |
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Purchases of marketable securities |
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( |
) |
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( |
) |
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Proceeds from the sale and maturity of marketable securities and other |
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Purchases of other investments and intangible assets |
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( |
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( |
) |
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Acquisition of preCARDIA, net of cash acquired |
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( |
) |
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— |
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Acquisition of Breethe, net of cash acquired |
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— |
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( |
) |
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Purchases of property and equipment |
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( |
) |
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( |
) |
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Net cash (used for) provided by investing activities |
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( |
) |
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Financing activities: |
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|
|
|
|
|
|
|
Proceeds from the exercise of stock options |
|
|
|
|
|
|
|
|
|
Taxes paid related to net share settlement upon vesting of stock awards |
|
|
( |
) |
|
|
( |
) |
|
Repurchase of common stock |
|
|
— |
|
|
|
( |
) |
|
Net cash used for financing activities |
|
|
( |
) |
|
|
( |
) |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
|
( |
) |
|
Net (decrease) increase in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid for income taxes |
|
$ |
|
|
|
$ |
|
|
|
Supplemental disclosure of non-cash activities: |
|
|
|
|
|
|
|
|
|
Contingent consideration related to the acquisition of Breethe |
|
|
— |
|
|
|
|
|
|
Property and equipment in accounts payable and accrued expenses |
|
|
|
|
|
|
|
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|
Right-of-use assets obtained in exchange for lease liabilities |
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The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)
7
ABIOMED, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share data)
Note 1. Nature of Business
ABIOMED, Inc. (the “Company” or “ABIOMED”) is a provider of medical devices that provide circulatory support and oxygenation. Our products are designed to enable the heart to rest by improving blood flow and/or provide sufficient oxygenation to those in respiratory failure. Our products are designed to enable the heart to rest by improving blood flow and/or provide sufficient oxygenation to those in respiratory failure. The Company develops, manufactures and markets proprietary products that are designed to enable the heart to rest, heal and recover by improving blood flow and/or performing the pumping function of the heart. The Company’s products are used in the cardiac catheterization lab, or cath lab, by interventional cardiologists and in the heart surgery suite by cardiac surgeons for patients who are in need of hemodynamic support prophylactically or emergently before, during or after angioplasty or heart surgery procedures.
Note 2. Basis of Preparation 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, 2021 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, 2021 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, 2021 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.
Certain prior period amounts within the notes to the condensed consolidated financial statements have been reclassified to conform to the current period presentation.
COVID-19 Pandemic
The Company is subject to risks and uncertainties as a result of the ongoing COVID-19 pandemic. 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. The full extent to which the pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including sales, expenses, manufacturing, clinical trials, research and development costs, reserves and allowances, fair value measurements, asset impairment charges, contingent consideration obligations, and the effectiveness of the Company's hedging instruments, will depend on future developments that are highly uncertain and difficult to predict. These developments include, but are not limited to: the duration and spread of the ongoing COVID-19 pandemic (including new variants of COVID-19), its severity, the actions to contain the virus or address its impact, the timing, distribution, and efficacy of vaccines and other treatments, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume.
While the 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. Hospitals are generally managing the pandemic better currently than they have in the earlier part of the pandemic due to more testing, improved protocols, more experience with the effects of COVID-19 and a greater number of vaccinated caregivers. During these challenging times, the Company’s priorities have been to support its clinician partners, protect the well-being of its employees and maintain continuous access to its life-saving technologies while offering front-line in-hospital support. The Company has established onsite COVID-19 testing and vaccination for its employees in both Danvers, Massachusetts and Aachen, Germany, set up temperature-taking stations, administered thousands of COVID-19 tests to date and provided personal protective equipment for its employees in order to maintain a safe working environment.
8
The Company’s proactive testing program has reduced exposure with early detection, reduced employee anxiety and enabled its manufacturing facilities to operate at full capacity in line with local social distancing requirements. The Company also took proactive actions in order to mitigate the business impact of COVID-19 on its financial operations and it continues to monitor closely in order the business impact of COVID-19. Despite the ongoing challenges posed by COVID-19, including the recent global resurgence, the Company continues to invest strategically in engineering, regulatory, clinical trials and manufacturing in order to support its future growth initiatives and sales and marketing activities, with a particular focus on training and education initiatives to drive utilization of its products and recovery awareness for acute heart failure patients.
The Company continues to closely monitor the impact of COVID-19 on all aspects of its business and geographies, including its impact on its customers, employees, suppliers, vendors, business partners and distribution channels. The extent to which the COVID-19 pandemic impacts the Company’s business, results of operations, and financial condition will depend on future developments, which are highly uncertain and are difficult to predict. Even after the ongoing COVID-19 pandemic has subsided, the Company may continue to experience materially adverse impacts on its financial condition and results of operations.
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Simplifying the Accounting for Income Taxes (ASC 740). The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740, including requirements related to hybrid tax regimes, the tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of entities not subject to tax, the intra-period tax allocation exception to the incremental approach, ownership changes in investments, changes from a subsidiary to an equity method investment, interim-period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim-period tax accounting. This guidance is effective for the Company for annual and interim periods beginning after December 31, 2020; however, early adoption is permitted. The Company adopted this standard as of April 1, 2021 on a prospective basis. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815),” an amendment clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivative instruments. The guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted this standard as of April 1, 2021 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 other new accounting pronouncements, issued or effective, during the period had, or are expected to have, a material impact on our condensed consolidated financial statements.
Note 3. Acquisitions
Acquisition of preCARDIA, Inc.
The Company acquired
The Company acquired preCARDIA for a purchase price of $
In connection with the acquisition, the Company acquired net assets of $
Acquisition of Breethe, Inc.
9
The Company acquired Breethe, Inc. (“Breethe”), a Maryland corporation, on April 24, 2020. Breethe is engaged in research and development of a novel extracorporeal membrane oxygenation (“ECMO”) system that will complement and expand its product portfolio to more comprehensively serve the needs of patients whose lungs can no longer provide sufficient oxygenation, including patients suffering from cardiogenic shock, or respiratory failure, such as ARDS, H1N1, or COVID-19. The Company acquired Breethe for $
Purchase Price Allocation
The acquisition was accounted for as a business combination. The purchase price for the acquisition has been allocated to the assets acquired and liabilities assumed based on their estimated fair values and was finalized in the year ended March 31, 2021.
The acquisition-date fair value of the consideration transferred is as follows:
|
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Total Acquisition Date Fair Value (in thousands) |
|
|
|
Cash and other considerations |
$ |
|
|
|
Contingent consideration |
|
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|
Total consideration transferred |
$ |
|
|
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on the date of acquisition (in thousands):
|
Acquired assets: |
|
|
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|
Cash and cash equivalents |
$ |
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|
|
Property and equipment |
|
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Goodwill |
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In-process research and development |
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Other assets acquired |
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Total assets acquired |
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Liabilities assumed: |
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|
Accounts payable and other liabilities |
|
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|
|
Deferred tax liabilities |
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|
|
|
|
|
|
|
Net assets acquired |
$ |
|
|
Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. The goodwill is not expected to be deductible for income tax purposes.
10
Note 4. Net (Loss) Income Per Share
Basic net (loss) income per share is computed by dividing net (loss) income by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share is computed by dividing net (loss) income by the weighted average number of dilutive common shares outstanding during the period. Diluted shares outstanding are 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 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.
|
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|
For the Three Months Ended June 30, |
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2021 |
|
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2020 |
|
|
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
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|
Weighted average shares – basic |
|
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|
|
Net (loss) income per share – basic |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
For the Three Months Ended June 30, |
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