Abiomed, Inc. (ABMD) Q4 2021 Earnings Call Transcript

Abiomed, Inc.  (NASDAQ: ABMD) Q4 2021 earnings call dated Apr. 29, 2021

Corporate Participants:

Todd A. Trapp — Vice President and Chief Financial Officer

Michael R. Minogue — Chairman, President and Chief Executive Officer

Analysts:

Margaret Kaczor — William Blair — Analyst

Chris Pasquale — Guggenheim Securities — Analyst

Anthony Petrone — Jefferies — Analyst

Chris Cooley — Stephens, Inc. — Analyst

Matthew O’Brien — Piper Sandler — Analyst

Jayson Bedford — Raymond James — Analyst

Marie Thibault — BTIG — Analyst

Calvin — Morgan Stanley — Analyst

Danielle Antalffy — SVB Leerink — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter 2021 Abiomed Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to Todd Trapp. Please go ahead.

Todd A. Trapp — Vice President and Chief Financial Officer

Thanks, Sarah. Good morning and welcome to Abiomed’s fourth quarter ’21 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 fourth quarter business and operational highlights and then I will review our financial results, which were outlined in today’s press release. After that, we will open the call to your questions.

Before we begin, I would like to remind everyone that today’s call includes forward-looking statements. The company cautions investors that any forward-looking statements 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 obligations to update forward-looking statements.

With that, let me turn the call over to Abiomed’s Chairman, President and Chief Executive Officer, Mike Minogue.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Thanks, Todd, and good morning everyone. Throughout the COVID-19 pandemic, Abiomed has remained on course to advance our innovation and become the standard of care for circulatory support. We adopted and executed, while successfully transitioning from our red, yellow and green phases to Abiomed 2.0. The 2.0 marks our transformation into a smarter and more connected online medical device company with a COVID playbook. We conduct on-site and online training and education and provide patient support with smart algorithms to track real world utilization in the cloud, identify best practices and optimize patient care.

For the quarter, Abiomed delivered a company record of $241 million in revenue, up 17% year-over-year with double-digit growth and record revenue across the U.S., Europe and Japan. Within the quarter, we saw monthly sequential improvement in both global revenue and patient utilization. Q4 investments continued, while achieving a 26% GAAP operating margin. Applying our Abiomed 2.0 COVID playbook, we definitively transitioned to the green phase, validated with record number of patients supported in a quarter, in a month, in a week and in a day, all in Q4.

Turning to the full fiscal year, Abiomed delivered $848 million in revenue, up 1% year-over-year and 27% operating margin despite the COVID-19 pandemic. We took a disciplined approach to the fiscal year to help us navigate the uncertain environment and achieve our tactical plan. Over the past year, we endured the setbacks of COVID-19 and focused on keeping employees safe, making life-saving heart pumps and supporting our hospitals and patients. We controlled expenses and invested in innovation, new clinical studies and expanded distribution, while remaining fiscally responsible. Our balance sheet strengthened to $848 million in cash, while maintaining zero debt and acquiring an ECMO platform. In addition, our IP portfolio increased to 1,150 Impella patents and 940 patents pending. We achieved a significant number of regulatory approvals and established world-class online training and education with Camp PCI.

At Abiomed, our patients-first mindset gives us purpose and courage and we always seek opportunities to lead, manage, adapt and execute. For this fiscal year, I would like to thank our employees and customers for their courage, dedication to patients and leadership throughout the pandemic. We exited the year slightly up in revenue, profitable and stronger than ever before.

For today’s call, I will highlight our fiscal ’21 innovation that will drive our success and momentum into our fiscal year ’22 goals and beyond. In fiscal year ’21, Abiomed launched revolutionary innovation across multiple patient populations, starting with the accelerated rollout of Impella Connect, our remote monitoring capability, allowing us to go live at nearly 1,000 hospitals in the U.S. Currently 70% of our patients are monitored in the cloud with Impella Connect. No other company in our space provides this level of 24/7 on-site, on-call and online support. This is particularly meaningful in the COVID environment. We have also expanded our global footprint within Impella Connect at 29 hospitals in Germany and 49 hospitals in Japan.

Next, the Impella 5.5 with SmartAssist continues to deliver strong results. Within the quarter, our U.S. Surgical revenue grew 46% year-over-year as we expanded this device to 53 more sites totaling 211 sites. For the full fiscal year, U.S. Surgical revenue grew 44% year-over-year, driven by strength in patient utilization. The Impella 5.5 is a revolutionary product because it is minimally invasive, provides forward flow and is a fully unloading heart pump designed for heart surgeons. It is inserted via the axillary artery or directly into the aorta and designed for longer duration support within patient ambulations. The Impella 5.5 has reported comparatively higher survival rates and native heart recovery for the acutely decompensating heart failure patient population, representing an additional 100,000 treatable U.S. patients. Heart surgeons are also enthusiastic about our BTR heart pump, first-in-human experience, expected in the fourth quarter of this fiscal year.

Turning to our Abiomed Breethe OXY-1 System. We have now treated 20 patients to date at several sites. In March, I visited our Breethe facility in Baltimore and met a Breethe ECMO patient on support at the nearby University of Maryland Medical Center. The feedback from physicians on this innovative compact cardiopulmonary bypass system has been positive. Customers highlight the ease of use with the simple intuitive interface and the light portable design allowing for ambulation. We will continue to innovate and plan to optimize this technology with smart ECPella software and connected cloud monitoring.

Moving on to our regulatory progress. We advanced our U.S. FDA early feasibility study for the Impella ECP, a true 9 French heart pump. As a reminder, in early Q4, we received FDA approval for the expansion of the early feasibility study to 20 patients and have enrolled 10 patients to date. The excitement for PROTECT IV is palpable in the heart failure community and we recently announced our first patient enrolled at Ascension St. John Hospital in Detroit. It is important to note that PROTECT IV was designed by the leaders and best clinical trialists in the field of cardiovascular medicine. It is an on-label, prospective, multicenter, randomized controlled trial that is designed to provide the level of clinical evidence needed to achieve a global Class I guideline recommendation for Impella in high-risk PCI in the future.

The intent of PROTECT IV RCT is to leverage and validate the best practices that we have learned over the past 10 years in the PROTECT series and CVAD studies that led to the exclusive FDA PMA approval of Impella for high-risk PCI. We believe the heart failure community’s engagement will propel the PROTECT IV study to be a landmark trial for high-risk PCI overall as a new treatment alternative.

In the past, we have defined our current addressable market for high-risk PCI as 121,000 U.S. patients. As a result of the PROTECT IV study, we are directly investing this year in outreach referral programs that we expect will better identify the under-treated population of an additional 319,000 high-risk PCI patients that are turned down for surgery and not referred for Protected PCI treatment due to not being diagnosed or tested for coronary artery disease. Since the PROTECT IV study is on-label and spans the heart theme, we now estimate our new U.S. addressable patient population for high-risk PCI to be 440,000 patients.

For context, 15 million people in the U.S. have coronary artery disease and heart failure and it causes approximately 1 million deaths per year. Coronary artery disease and heart failure remains the leading cause of death overall, and is the number one cause of death for people with Type 2 diabetes. While we will not complete this study in fiscal year ’22, we now have line of sight and a path forward to solidify the new standard of care for high-risk PCI with the goal of complete revascularization and improvement in patient quality of life and ejection fraction.

Finally, I want to highlight some of our goals for Abiomed 2.0 fiscal ’22 and beyond with investments focused on extending our lead in innovation, advancing Impella clinical evidence and establishing commercial excellence with a premier distribution team. First, we will continue to invest in R&D as we innovate best-in-class heart and lung support technologies that are smaller, smarter and connected to improve ease of use and clinical outcomes. Second, we plan to execute multiple RCT’s, including STEMI DTU, PROTECT IV and advance the RECOVER IV cardiogenic shock design with the goal of achieving Class I guidelines overall.

In addition, we expect to further validate the safety and efficacy of Impella and the importance of complete revascularization in high-risk PCI with the publications of PROTECT III and RESTORE EF. For cardiogenic shock, positive clinical results presented yesterday at the SCAI Scientific Sessions for the physician-initiated National Cardiogenic Shock Initiative will be published.

Separately, the positive results presented by the MHLW PVAD Japanese Heart Committee will also be published. Because these cardiogenic shock patients are difficult to randomize and consent, our best practice protocols are derived from over 10 years of real world evidence and over 100,000 patients with physician-initiated and prospective FDA and PMDA studies in the U.S., Europe and Japan. This new paradigm focuses on improved survival and native heart recovery.

And finally, through a combination of our U.S. distribution expansion, and leveraging Camp PCI, we plan to deliver best-in-class training and education on-site and online with the goal of identifying patients’ improving outcomes and driving Impella adoption.

Before I conclude, I want to share a patient story. Chris Kirkman, a 48-year-old husband, father and Sales Director from Zachary, Louisiana, has a family history of heart disease and has lived with hypertension for 20 years. In December 2020, after experiencing shortness of breath, fluid buildup around his abdomen and difficulty sleeping, Chris visited a local emergency clinic. He was prescribed medication and sent home. Chris’ symptoms gradually became more severe over the next few months. When he experienced trouble breathing, Chris’ wife drove him to the local hospital, where he was diagnosed with advanced coronary disease and congestive heart failure with poor ejection fraction at 20%. He was told he was too high-risk for bypass surgery and discharged home with a wearable defibrillator.

Chris was then referred to interventional cardiologists, Dr. Abraham at Baton Rouge General – Bluebonnet. Dr. Abraham identified Chris as an appropriate candidate for Protected PCI with Impella. When he returned for the scheduled procedure, Dr. Abraham successfully achieved complete revascularization with the help of Impella CP heart pump and Chris was discharged home the next day. During his follow-up exam, Chris’ ejection fraction improved to 45%. Today, Chris is thankful to be back at work, and enjoying a healthier lifestyle with his wife and three children.

In conclusion, I’m very proud of our employees and customers for their dedication and courage during the COVID pandemic. Despite the challenging circumstances on both professional and personal levels, Abiomed 2.0 delivered one of our most productive fiscal years in my 17-year tenure as CEO. I am confident that Abiomed will not just be a successful company, but will drive a new standard of care for multiple growing populations of high-risk heart failure patients around the world.

We look to the new fiscal year with great excitement because we are a stronger company today and have a clear path for execution to fulfill our heart recovery mission. And last, we sincerely appreciate the continued support from our patients, customers and shareholders.

I will now turn the call over to Todd.

Todd A. Trapp — Vice President and Chief Financial Officer

Thank you, Mike and good morning everyone. Now, starting with Q4 results. As Mike mentioned, we delivered record revenue of $241 million, an increase of 17% year-over-year with double-digit growth across the U.S., Europe and Japan. We leveraged our Abiomed 2.0 COVID playbook, which allowed us to transition to the green phase, where we grew patients and revenue year-over-year and delivered on our innovation, regulatory and clinical milestones despite the current environment.

Turning to our regional performance. U.S. revenue grew 13% to $196 million, driven by a 13% increase in patient utilization. We saw double-digit growth in both high-risk PCI and cardiogenic shock. The pandemic hit peak levels in the first few weeks of January, which impacted patient utilization. However, as COVID cases and related hospitalizations began to decline and we executed our playbook, we delivered sequential improvements in patients and revenue in each month of the quarter. We also set a patient and revenue record in March. At the end of our fiscal Q4, in the U.S., the CP is now in 1,509 sites. We have placed the Impella 5.0 in 663 sites and the Impella 5.5 with SmartAssist is now in 211 sites, up 53 sites versus prior quarter. Lastly, the Impella RP is now in 588 sites, up 19 versus Q3. U.S. reorder performance in the quarter was slightly below 100% and average combined inventory at the hospitals for the Impella 2.5 and CP was 4.7 units per site, consistent with the inventory levels we saw in Q3.

Turning to outside the U.S. In Q4, total revenue was $46 million, up 33% year-over-year, driven by strength in Europe and Japan. Our European revenue increased 28% year-over-year due to higher patient utilization in several markets such as Germany, Austria, and the UK and a benefit from the euro-U.S. dollar foreign exchange rate. Similar to the U.S., in Europe, we saw an impact in January when certain countries mandated lockdowns as COVID cases and deaths accelerated. However, here too, we leveraged the COVID playbook, executed on our plan and delivered monthly sequential improvement throughout the quarter. Japan continues to perform very well, delivering $11.6 million in revenue, up 38% year-over-year, driven by patient utilization. We opened 10 new sites in the quarter, bringing our total to 166 sites.

Moving forward, gross margin for Q4 was 80.9%, flat compared to the prior year due to benefits from increased production volume offsetting higher material spend and stock-based compensation. R&D expense totaled $32 million, an increase of 26% from the prior year. The value of our ongoing innovation has been evident throughout the past year and we believe it will continue to create value as we invest in advancing the Impella ECP, XR Sheath, Breethe OXY-1 System and Impella BTR and in clinical evidence with PROTECT IV, STEMI DTU and Danger.

SG&A expense for the quarter totaled $100 million, up 20% versus prior year. The increase was due to targeted investments we made in expanding our distribution team, incremental advertising and higher stock-based compensation.

In the quarter, GAAP operating income grew 8% to $63 million translating to an operating margin of 26%. The variance versus prior year, again, was driven by growth investments and higher stock-based compensation. Net income for the quarter was $57 million or $1.24 per diluted share versus $0.70 in Q4 ’20. Net income increased 79%, primarily due to the mark-to-market investment in Shockwave. Shockwave impacted our reported EPS by $0.13 in the quarter.

Our balance sheet remains robust. In Q4, we generated $86 million of operating cash flow and approximately $275 million for the year. As a result, we ended the fiscal year with $848 million in cash, up $197 million or 30% versus last year, while remaining debt free. Our strong balance sheet provides us with stability, as well as with flexibility to make continued investments.

Now turning to our full year performance. Throughout the fiscal year, we were agile within the COVID environment, navigating the challenges presented by it, but remained disciplined and executed on our goals. As a result, we saw quarterly improvement in both patients and revenue and delivered global revenue of $848 million, an increase of 1% versus prior year despite the global pandemic.

By geography, on a year-over-year basis, the U.S. declined 2%, while Europe and Japan grew 12% and 22%, respectively. GAAP operating income for the fiscal year ’21 was $230 million, down 8% compared to the prior year, which equates to a 27.1% operating margin. We took a fiscally disciplined approach throughout the year. We controlled discretionary expenses and instituted temporary actions to reduce costs, while investing at record levels in innovation. In fiscal year ’21, we invested $122 million in R&D, up 23% year-over-year. Additionally, we added 40 heads to our distribution team within the year with the majority occurring in our fourth quarter. Net income for the year was $226 million or $4.94 per diluted share versus $203 million or $4.43 in the prior year. The 11% increase was primarily driven by our equity investment in Shockwave.

Lastly, turning to our guidance for fiscal year ’22. For the full year, we expect revenue to be in the range of $990 million to $1.03 billion, which translates to 17% to 22% growth for the year. At the low end, our guidance assumes some continued uncertainty with COVID; namely, unevenness in recoveries caused by resurgences, national lockdowns, new strains, vaccine availability, and adoption. At the high end of the range, our assumptions include vaccines are broadly distributed, leading to lower new COVID cases and a social and economic return to normality, which should have a positive effect on our customers and our business.

As we typically do when issuing guidance, I would like to provide some color on our expectations to the seasonality of our fiscal year. In Q1, we anticipate that utilization will remain uneven as we continue to endure the different transition pace across geographies of resurgences, recovery and vaccinations globally. However, we remain confident in the efficacy of our playbook and execution and our ability to continue to treat patients in this environment and believe revenue in Q1 ’22 will be flat to slightly above Q4 ’21 revenue of $241 million.

Historically, Q2 is a seasonally slow quarter for cardiovascular devices due to the summertime slowdown in the cath lab and physician vacations. We believe this could be exasperated this year, given the potential vacations and pent-up demand for travel. So we expect Q2 revenue to be flat or slightly below the Q1 pace. As we transition to the back half of the year, we typically see sequential lift in Q3 based on increased hospital activity and physician engagement. And in Q4, our March quarter, we expect to have our best results as we end our fiscal year.

Turning to operating margin. We expect our fiscal year ’22 margin to be in the range of 24% to 26% as we step up targeted investments in innovation, clinical evidence and distribution. A significant portion of our incremental investment will be in R&D as we innovate best-in-class heart and lung support technologies and further validate the safety and efficacy of Impella with multiple ongoing randomized controlled trials. We also plan to expand our distribution, accelerate marketing initiatives, and grow our training and education programs.

In summary, fiscal year ’21 was a challenging, but very productive year for us as we endured the pandemic and transitioned to Abiomed 2.0. We are pleased to have delivered year-over-year top-line growth, achieved GAAP operating margin of 27% and increased our cash to $848 million, all while continuing to make necessary investments to drive Abiomed’s long-term sustainable growth. We have come through an exceptionally challenging year. I am proud of our employees around the globe for their commitment and hard work and for their accomplishments. I am very excited for the year ahead as we continue to build the new field of heart recovery.

Operator, please, now open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Margaret Kaczor with William Blair. Your line is now open.

Margaret Kaczor — William Blair — Analyst

Hey, good morning, guys. Thanks for taking the questions. I wanted to start a little bit with guidance and then a bigger picture question. So first, can you provide any more clarity on March and April? And then as we look at kind of the Q1 comments that you made, Todd, it looks like — and historically, maybe you’re up 1% to as high as 6% the last several years. I mean, given that we’re kind of on the back-end of the recovery and you’re moving into the green phase, why shouldn’t we assume that Q1 maybe just a little bit better than that, given what we had seen in Q4?

Todd A. Trapp — Vice President and Chief Financial Officer

Thanks, Margaret, for the question. So if you think about the progression in Q4, we did start off fairly soft in January that we highlighted on our last call and then we did see sequential improvement in February and March. I would tell you, if you look at just our high-risk PCI performance in March, you can make an argument that there was a little bit of a bolus from procedures that were deferred, I would say, in December into January. So as it looks from an April perspective, we’re not going to provide April actual performance at this point of time, I think we have factored that into the color we provided about Q1 in our prepared remarks, that it would be flat to slightly above Q4. But ultimately we think that’s — that makes sense at this point in time for based on what we’ve seen so far in April.

Margaret Kaczor — William Blair — Analyst

Okay, thanks. And then in terms of the beat, at least relative to our numbers, 5.0, 5.5 seems to do really, really well. Any kind of color you can give there, differences in utilization accounts, maybe the upgrade to 5.5 from 5.0? Or are you going deeper in accounts, given these product improvements?

Todd A. Trapp — Vice President and Chief Financial Officer

Yeah, I mean, Mike’s commented 5.0, 5.5, our surgical business was up over 40% in the quarter. So it continues to perform very well. We’re in over 200 hospitals today. We’d expect that to continue. If you look at our patients, our patients are up substantially as well in 5.5, it’s a great product and I expect to see that momentum continue into fiscal year ’22.

Margaret Kaczor — William Blair — Analyst

Okay. And just kind of last one, again, kind of a little bit bigger picture, you guys have a lot of things out that you’re investing in right now, whether it’s the RCTs, you’ve got the ECMO platform, even the Shockwave investment on the side. There’s a lot going on, ECP and the rest. As you think about kind of the next two to three years, how do you outline those various types of opportunities and what’s the next thing that you’re going to spend your cash on? Thanks.

Michael R. Minogue — Chairman, President and Chief Executive Officer

So, Margaret, this is Mike. Thanks for the question. On the big picture, we come out of COVID-19 all-in on innovation, on clinical research and on distribution. And so I think you’re going to continue to see that in the tactical execution. For innovation, you’re going to continue to see the execution of these new products that are revolutionary, ECP, the Impella Connect, ECMO, ECPella, 5.5, bridge to recovery. I mean, these are — this is the new innovation that’s going to take heart failure and focus it on heart recovery. For clinical research, we’re now taking all of the studies and the leverage that we’ve done and we posted a summary of the clinical studies on a slide in our — on the website. But it’s just we’ve learned now how to optimize high-risk PCI, we’ve learned how to optimize cardiogenic shock and we’ve learned how to optimize survival and return to baseline for acute on chronic heart shock, so these are the cardiomyopathy patients.

And so those are the things we’re working on. We think we’re going to further our lead across the board. And, of course, we’re going to solidify our patent position as we go. So we’re very excited, because as I said in my prepared remarks, I do think we will have the path forward and create a new standard of care for high-risk PCI, for STEMI, for cardiogenic shock and for heart failure overall. So we’re excited to be where we are coming out of the year.

Margaret Kaczor — William Blair — Analyst

Great, thanks, guys.

Operator

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

Chris Pasquale — Guggenheim Securities — Analyst

Thanks, and congrats for nice finish to the year. A couple of questions. One just, Todd, circling back on the margin guidance. That’s down, obviously, from FY ’21 down quite a bit from where you guys were in ’19 and ’20. I appreciate the investment, you guys got some clinical trial starting to ramp up here, but we’re also coming off of the year in which R&D spending increased quite a bit. So just curious on the other elements of the investment there. What are you doing from a distribution standpoint that’s different and will require significant step up? And do you view this as a one-year drop in the profitability and then you would start to see leverage again or is this a multi-year phase you’re entering into?

Todd A. Trapp — Vice President and Chief Financial Officer

Yeah, thanks for the question, Chris. When I think about our investments for this year, I mean we’re all-in on our, what I call, growth enhancing investments. So it’s innovation, its clinical evidence and its distribution. So when you think about innovation, it’s smaller, smarter, more connected devices, ECP, the expandable sheaths, the AI algorithms. Think about the investments we’re making in BTR, which again would open up another 100,000 patient population for us for heart failure and then continued investment in Breethe. When I look at clinical evidence, it’s really STEMI, PROTECT IV, the early feasibility study with ECP. I look at these as more digital events that require investment. They’re not really long-term investments in R&D. So I think, over time, you will see R&D as a percentage of sales will moderate as we execute on our trials.

And then the third big bucket is around distribution. We are expanding our distribution team, Chris. We are — if you went back and looked at our performance over COVID, we noticed that the smaller regions tended to perform better than some of our larger regions. So we’ve made the decision to go from 17 regions in the United States to 23. We started making that investment in Q4, you’ll see a little bit more of that investment in Q1. So we are expanding our distribution team, putting more feet on the street and having more local leadership. We are expanding advertising in our direct-to-patient initiatives that Mike highlighted in his comments, again targeting that 319,000 untreated population, utilizing PROTECT IV. And then we’re going to be doing a little bit more trade shows and education. So I think some of it in R&D and most of it in R&D is going to be, I would say, temporary over the next year or two. It’s a big investment year for us. With that said, at our operating margin guidance of 24% to 26%, midpoint at 25% is still pretty strong, given the fact that we’re driving 17% to 22% top-line growth.

Chris Pasquale — Guggenheim Securities — Analyst

That’s helpful, thanks. And then maybe just to follow-on there, you touched on this direct-to-consumer initiative, trying to get at some of these broader population of patients who could be appropriate for high-risk PCI. But you’re talking about patients who are undiagnosed, which always brings up questions about really the feasibility of getting at that type of population. It’s not as if we’re not looking for heart disease in this country. So how realistic is it to really bring those patients into the fold, especially since penetration of Impella-supported PCI within the diagnosed population is still relatively low today?

Michael R. Minogue — Chairman, President and Chief Executive Officer

Chris, that’s a good question and very insightful relative to why high-risk PCI still remains out there. If you look at TAVR when they started, they went out and identified the patients that were surgical turndowns. They weren’t considered for the cath lab, because they didn’t have the technology. The same is true with Mitral as well as the WATCHMAN. When PROTECT II started, none of those patients went to the cath lab and nearly all those patients had already been turned down for surgery but not considered for high-risk PCI. The exciting thing about PROTECT IV and the engagement of the heart failure community and heart failure cardiology, specifically, is they don’t consider PCI in general practice and what they really look at is optical medical management or the invasiveness of a surgery, which many of these patients are turned down.

So moving forward, because they’re involved in the design of PROTECT IV and as one physician described it the other day in a broad presentation, he said the PROTECT IV is essentially a heart failure study and what it does is it opens up another therapy for this growing population, these Type 2 diabetes patients that have poor ejection fraction. They don’t want or they’re turned down for surgery and you can see a benefit with Protected PCI. What’s unique about and what’s new is that our Protected PCI patients show an improvement in their quality of life and show an improvement in their ejection fraction in 90 days. And so that’s what’s unique. And now that we look at the historic trends, when people do show up in the hospitals, they usually — for these types of cases, they only look at it at the — and try to look for coronary disease around 17% of the time and it’s less than 5% of the time that people are actually getting revascularization in the index admission.

So there is a lot of opportunity there and it’s not anyone’s fault, it’s just that the heart failure community has not been looking at or considering a Protected PCI solution, because in the past, PCI did not improve EF. That was only done with open heart surgery with CABG. Moving forward, that’s something we’ve been able to show in multiple FDA studies, PROTECT II, PROTECT III and also in RESTORE EF. And that will be the gain and I believe that’s why heart failure — the heart failure community overall will get engaged.

Chris Pasquale — Guggenheim Securities — Analyst

Thanks.

Operator

Thank you. Our next question comes from the line of Anthony Petrone with Jefferies. Your line is now open.

Anthony Petrone — Jefferies — Analyst

Thanks, and good morning. Congratulations on the quarter. I hope everyone’s doing well. I have one on reimbursement and one on PROTECT IV. The first one on reimbursement is just sort of a rehash and a recap of the IPPS proposals from earlier this week. Maybe specifically on the proposal, the recommendation to shift high-risk PCI out of 215 to adjoining codes, maybe just how, sort of, you’re viewing that. It seems overall that this actually cleans up reimbursement going forward and maybe perhaps streamlines the process in future rounds. So maybe just some views there and then I have a follow-up on PROTECT IV.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Anthony, thanks for the question. On CMS and the reimbursement, we agree with your comments. We’re pleased and we believe it now provides a permanent solution. What we’ve always talked about is that Impella is a platform with multiple patients and so we positioned the products and the reimbursement and even in the future, some of the pricing. You have a four-hour pump per procedure, that’s a high-risk PCI. You’ve got a four-day patient, that’s a cardiogenic shock patient in the ICU on Impella Connect with smart algorithms, and you’ve got this acute on chronic shock patient, that’s a four-month — up to a four-month potential patient with the 5.5 and future BTR pump.

So it definitely aligns completely with what we’re doing. So, it allows for the differentiation for the type of resources and support that we provide. We do think it’s a permanent — more permanent solution and it also really aligns with our hub-and-spoke strategy. As Todd mentioned, we saw that when COVID hit, we saw a bigger growth in the small-to-mid-sized hospitals and regions. So we went a little bit leaner and a little bit faster by adding more regions and more team approaches. But we also saw in March a massive swing back in the large centers. And so part of that has to do with our hub-and-spoke coordination, where if a patient ends up in any cath lab, we’re going to know about it, we’re going to be there to support and we’ll be in the cloud watching. But then we can also help monitor and work together with the top centers that do the most complex work with the spoke centers and we are — and what CMS also did was slightly increase our DRG 268, which allows those outlying hospitals to place the Impella, stabilize the patient and then make the decision if they want to send them to the high-end center.

The last piece of this has to do with our distribution. We are going to maintain this distribution overall in all the cath labs, but we do have a dedicated team now, that’s a heart recovery team that’s working directly with the heart surgeons and the heart failure cardiologists. We think that will help with the referral network. But it also allow us to go deeper to those transplant centers. There are about 140 of them that really do the most advanced work and those chronic patient care that we’re excited now to bring 5.5, BTR. And RP did rebound as well in this quarter. We’re going to put SmartAssist on RP so we’ll now get some of the information on a biventricular patient that has never existed. And we’re going to make further improvements to the RP to ensure that the surgeons also have a way to utilize it. So lots of good things happening with CMS. We appreciate the work and the thoughtfulness that they put into the final rule.

Anthony Petrone — Jefferies — Analyst

That’s very helpful. And my follow-up on PROTECT IV will be maybe just a broader view here and a sense on timing. It looks like you’re targeting over 1,200 patients, 100 sites in Europe, U.S. So I just want to get a sense of timing on enrollment and then maybe a question on the design, looking at Dr. Gregg Stone, the lead PI, he mentions, obviously, the goal here is to operate on more complex cases and perform more complex revascularization and, Mike, it brings me back to PROTECT II, when there was the rotational atherectomy arm. And so can you give us a sense if there will be cohorts based on specific surgeries and sort of how that will sort of evolve as this study gets underway? Thanks.

Michael R. Minogue — Chairman, President and Chief Executive Officer

So, Anthony, the PROTECT IV study timing, we’re not giving specific timing right now just because we want to get a few months away from the transition with the vaccines. We have described in detail the study, Dr. Chuck Simonton did a webcast on it last year, so that’s still up on our Investor page. And we’ll give more details. But to your specific question on the design, think of it as a on-pump PCI, which is the Impella-supported PCI versus off-pump PCI, which is where the majority of these patients today, they actually don’t get a balloon pump. They get the in-and-out approach where the physician has to inflate the balloon or place stent quickly or otherwise the hemodynamics will collapse or they stage the patient or they do a combination of things or they limit the contrast because they’re worried about acute kidney injury.

So there will be patients that they will have the option to use a balloon pump and they know that. They know that today, that’s partly why they don’t necessarily use it today, because for many people it’s not something that’s going to provide hemodynamic support if the patient gets in trouble. And the majority of these patients today are in-and-out. But what PROTECT II showed, and other studies with Impella showed, is that these patients that when they get complete revascularization, with Impella support, we’ve been able to demonstrate significant improvements in the ejection fraction or the quality of life of these patients at 90 days.

Most recently, that was presented in the RESTORE EF and what the PROTECT III study also showed is lower adverse events on bleeding. So we’ve made great progress on access closure, but we’re also seeing that the physicians are doing a better job, leaving less ischemia and when they do that, that’s where you really see the benefit for the patient. In the past CABG did, and does get an improvement in EF because what they’re doing is taking a clean vein and rerouting the blood flow. So there is an improvement in EF but there is a price to pay with the sternonomy and the pump run and the recovery for a open-heart surgery.

And so in the end, what we — what we’ll have here is a design study that will be able to track everything in terms of quality of life, heart failure, readmissions, improvement in EF, and it’s really a comprehensive heart failure study designed by the trialists and it will have an adaptive design. But we feel very comfortable that the physicians know the patients are out there and they’re excited to work with their referral network and we’re very excited that this is going to — this is an on-label study. So we’re excited to get out there and start identifying these patients.

Anthony Petrone — Jefferies — Analyst

Thanks a lot. I’ll hop back in queue. Thank you.

Operator

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

Chris Cooley — Stephens, Inc. — Analyst

Good morning and thanks for taking the questions and congratulations on a very strong finish to an unprecedented year. If I could maybe just start with a question on international opportunities. In the past you’ve updated us a little bit about potential new markets to enter and I’ve realized that you are still very low rates of penetration sub-20% sub-5% when we think about Europe and Japan. But if you could just walk us through how you see the international market expansion taking place and also reconcile your slide on patient growth and revenue performance. You show a 12% sequential increase in Japan in the most recent quarter and maybe it’s a typo, but a 4% sequential decline in revenues. So maybe you could just help us with that. And then I’ve got a quick follow-up. Thanks so much.

Todd A. Trapp — Vice President and Chief Financial Officer

Thanks, Chris, for the question. In terms of — I’ll take the first part in terms of the Japanese performance in the fourth quarter. Obviously, it continues to perform very well, over $11.5 million. Patients in Japan for the quarter was up 50%. Revenue didn’t grow as much, it was down sequentially. And really, the function is simple, is we opened up four fewer sites in Japan this quarter versus what we did last year. It was about 10 sites this quarter. I think it was 14 sites last quarter. And so that’s really what’s driving, I would say, a little bit of a disconnect between patients and revenue in Japan. So overall, very strong performance, up 50%.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Now your second question was around just countries outside of Germany and…

Chris Cooley — Stephens, Inc. — Analyst

No, I was just — yes, I was just kind of curious about incremental markets and your thoughts there on timing.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Yeah. Chris, the PROTECT IV is a European study as much as it is a U.S. So the co-PI is an academic leader and recognized trialist. We’ve had strong growth and publications from Italy. So the Interventional Cardiology Society in Italy has been very active with publications, registry data. That’s the — that was recently presented and published last quarter, showing the benefits of Impella with high-risk PCI and higher survival by placing the Impella before the PCI and achieving complete revasc. We are seeing a lift in Europe overall. We’re starting to enter some of these other markets, and many of these top centers have expressed interest and will likely be in PROTECT IV.

Relative to Asia, we remain focused on — Japan is the priority, but we also are planting seeds. And again, top centers in Asia are starting to enter into the Impella training and focus on heart recovery. So we think there’ll be more there, but we also don’t want to lose focus that the three biggest drivers for global standard of care and for our execution remain U.S., Germany and Japan.

Chris Cooley — Stephens, Inc. — Analyst

Thank you. And if I could just maybe squeeze one other quick one in here. Just when you think about the expansions here in the United States from 17 to 23 regions, conceptually it makes sense, you’re closer to the customer, more frequent visits, they’re helping to drive greater growth in those territories. Curious though, are you seeing similar types of trends in both high-risk PCI and the shock patient populations? And also just as we see more patients on Impella Connect, help us kind of understand what this — how the distribution is really doing out there in the field? Just kind of want to get a better feel for what kind of lift you are seeing as you expand from 17 to 23. Thank you.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Chris, the design of our distribution and what’s happened out there is really part of the COVID playbook. So on the COVID playbook, we’re tracking weekly access to the hospital’s ICU capacity, Impella Connect and then we do see a flip back and forth between the high-risk PCI patients and the shock patients. We know if shock or pulmonary embolism or ECPella and those things go up, the ICUs fill up. That means that we’re going to have a bit of a delay in high-risk PCI at the big centers, but that bolus will come back. The interesting element of that is our smaller and mid-sized territories and hospitals, they did not see that dip as much because they then potentially do that patient and they don’t refer that patient to the larger center.

If we track on shock and you look at the year, six out of the 12 months had positive growth. Eight of the 12 months had flat to positive. And two — the first two months of COVID last April, May were down and they were down double-digit. But after that, shock itself recovered, and that’s kind of part of the playbook. And then in this hub-and-spoke piece of this, is, as we’ve mentioned, we set records in Q4. But in March, we set our records for most patients ever, most high-risk PCI patients ever and most cardiogenic shock patients ever. So we think the playbook works, and we like this hub-and-spoke network, and we like the changes we’ve made to the distribution to really capitalize on that opportunity.

Chris Cooley — Stephens, Inc. — Analyst

Thank you.

Operator

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

Matthew O’Brien — Piper Sandler — Analyst

Morning. Just a couple of questions on kind of some products that I think are helping the business right now. One of them is clearly helping the business versus just the guidance, which is good to see you getting back up to low-double-digits here, which I think is kind of what you’re targeting for the business going forward or maybe a little bit faster. But for starters, on the sheath side of things and I know this is kind of getting down to the weeds a little bit, Mike or Todd. But, what are you seeing as far as utilization of the 2.5 sheaths among centers that have access to it? And then what’s the timing on CP? Is it still kind of expected here in a few months? Because what I’m really trying to get at is, is this starting to accelerate some adoption of Impella because of access of the sheath and then CP can hopefully help accelerate things a little bit more?

Michael R. Minogue — Chairman, President and Chief Executive Officer

Thanks, Matt, for the question. So the short answer is the XR Sheath is the priority for CP. We do have it on the 2.5, and we did do cases in the U.S. last quarter. But the majority of our larger volume users are very comfortable with access closure today. PROTECT III showed we have low-single-digit vascular complications and bleeding. We also showed that in the STEMI DTU FDA study. The single access is now approved also in Europe and has been the means of choice by a lot of the physicians that do the most Impellas. And so they’d much prefer today to have the CP. They’re comfortable with access closure and they like the single access. So what we’re doing with CP is you have the XR Sheath, which is a 510(k), but we are also — in coordination with that, we’re making some minor adjustments to the product to augment that, but that will require a PMA submission supplement.

So that’s where we think we’re going to have the two aligned by the end of this fiscal year. But we’re also pretty confident that part of the momentum we’re seeing is just that the new techniques, the new clinical data and the single access really are the preference of our top centers.

Matthew O’Brien — Piper Sandler — Analyst

Okay. Makes sense. And then shifting over to 5.5, which is clearly a nice tailwind or a meaningful tailwind right now. Mike, it seems like there was an acceleration in the number of centers using the products or getting access to the product here in fiscal Q4. Are those 211 sites entirely sites that were using 5.0 before? And then among the sites — and again, I know we’re getting down into the weeds, but are you seeing some of the sites that are — where 5.5 was available, more clinicians coming over and starting to use Abiomed for other procedures, now that they can see 5.5, see how well it works and how unique it is? And then saying, okay, maybe I can use CP in some other patients as well. So are we getting any signs of kind of some growing momentum because of 5.5 throughout an entire center?

Michael R. Minogue — Chairman, President and Chief Executive Officer

Matt, the answer is yes, but it’s — remember, you have two different customer bases. You have the heart surgeons and then you have the interventional cardiologists. And they work together well in certain cases. They work together well in TAVR because they’re all aligned in the hybrid lab. But there’s still this inherent competition between high-risk PCI and CABG. And what we’ve shown is that the two work together, something we call high-risk revascularization. So as we identify these patients, some of these patients go for high-risk PCI, some of these patients go for high-risk CABG, where they utilize Impella and that was presented by Dr. Ed Soltesz from Cleveland Clinic on the approach that they use. And some of those CABG patients, they do have poor kidney function and they need support coming off the heart lung machine. And this presentation is also still up.

But what their protocol is, is if there’s acute on chronic patient, they go to the Impella 5.5 as the primary driver. They no longer use the 5.0. And the 5.5 has the optical sensor. It gives us the ability to see what’s happening and the pressure in the left ventricle. It’s ideal for weaning. Then they establish that patient, then they decide is the revascularization going to be done in the cath lab, by the intervention cardiologists, are they going to do it in the surgical suite with CABG. In certain cases, if they need a VT ablation, they’ll take them to the EP lab, and they’ll do a VT ablation but the Impella pump is stabilizing that acute on chronic patient.

That’s a different patient than an AMI shock patient, whose first symptom is the heart attack that leads to shock. That patient is still going quickly into the cath lab through the door to balloon time protocol, where they’ll put the Impella in before they do the PCI. So the short answer is yes, because it’s driving the science and the recognition of unloading. And it allows us to take patients and make sure that we maintain the ability to still provide a path of the least invasive, most cost-effective approach to not only keep the patient alive, but send them home with their own heart.

And so we’re really excited to see the leadership by Cleveland Clinic on surgery, Cedars out in LA, the teams in Chicago, across the board. The 5.5 is really a revolutionary product for heart failure. And we’ve added some heart failure people in the company and on the distribution. So we really are changing heart failure now to heart recovery, and it’s a different mindset, but it’s what 5.5 enables and what Impella BTR will continue because now we’ll have the ability to send the patient home and have a pump that runs even longer without a purge.

Matthew O’Brien — Piper Sandler — Analyst

Got it. Thank you.

Operator

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

Jayson Bedford — Raymond James — Analyst

Hi, good morning. Just a couple quick ones. I realize we’re at the top of the hour. Just on 5.5. So if 5.5 and 5.0 is 15% of U.S. revenue, what percent is 5.5 these days?

Todd A. Trapp — Vice President and Chief Financial Officer

I don’t have the actual percentage in front of me. It’s — the majority of the business now is 5.5. I would say it’s close to — it’s over — it’s probably over 75%, Jayson.

Jayson Bedford — Raymond James — Analyst

Okay. And then on the guide, just wondering if you could talk about the expected growth in the U.S., which obviously has a much easier comp versus international for fiscal ’22? Thanks.

Todd A. Trapp — Vice President and Chief Financial Officer

I think when you look at it across all three regions, we do expect to see double-digit growth. Obviously, rest of the world — OUS is going to be growing a little bit faster with Japan and Germany. But even in the United States, whether you look at the low, medium and high-end of our range, we do expect to see nice growth, double-digit, mid-teens growth in the U.S. A lot of it obviously driven by the surgical business. So I think, overall, it’s pretty evenly distributed across all three regions.

Jayson Bedford — Raymond James — Analyst

Okay. That’s helpful. Thanks, Todd. And just quickly, Mike, where are we with RECOVER IV in terms of starting that trial?

Michael R. Minogue — Chairman, President and Chief Executive Officer

We’ve got Executive Committee, Jayson. We’re working through some of the specific details of it. It’s a very difficult population to randomize, as you know, we’ve tried in the past. We think we can satisfy that now. We’re looking at some things around consent. And yesterday, we presented the final summation of the 406 patients in the NCSI with a 71% survival. But what’s really interesting in the presentation is that the status C, which is the kind of the classic shock patients had a 77% survival. We even have very positive survival on the Class C, which is the cardiac arrest group. So we’re — we have a tremendous amount of information.

We’re now working through the logistical challenges and how we’ll do the consent. We expect to finish the design end of the year and start this study the following year. But it really is a difficult population, but we feel very confident now with the best practices in Japan, in Italy and Germany and the U.S., that we have the formula for the higher survival with more than 90% having native heart recovery for this type of patient.

Jayson Bedford — Raymond James — Analyst

All right. Thanks, Mike.

Operator

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

Marie Thibault — BTIG — Analyst

Hi. Good morning. Thank you for taking the question. Just a quick one here to follow-up on the comments you made to Jayson. I wanted to confirm, we always like to see that U.S. patient metric, and I know you gave that to us this quarter, up 13% year-over-year. Is high-teens the right bar to think about if we think about the midpoint of your guidance for fiscal ’22?

Todd A. Trapp — Vice President and Chief Financial Officer

Are you talking from a U.S. perspective utilization?

Marie Thibault — BTIG — Analyst

Yeah. U.S. patient. Yeah, exactly.

Todd A. Trapp — Vice President and Chief Financial Officer

I would say patient utilization would be somewhere in that mid-teens. I think it makes sense based on our guidance.

Marie Thibault — BTIG — Analyst

Okay, sure. Yeah. I back into that. I just wanted to confirm, given some of the higher ASPs and benefit you’ve been seeing there. Okay. And then a quick follow-up here. I don’t think we’ve heard too much on Breethe, but it seems to be getting very good feedback. I would love to hear whether you’ve included any of that revenue in fiscal ’22, whether that’s something we can see as a meaningful contributor this year? Thanks for taking the questions.

Todd A. Trapp — Vice President and Chief Financial Officer

Yeah. Thanks, Marie. Good question. I think in terms of meaningful impacts, it’s been a great launch. We have five sites right now, treated over — about 20 patients. I think if you think about fiscal year ’22, it will be somewhat of that controlled rollout that we’ve talked about. So again, focus on training and education and, more importantly, patient outcomes. So we’ll continue to do a controlled rollout. And from a revenue perspective, I’d say it’s not going to probably have a material impact on us as we think about it, the big picture, probably more of a fiscal year ’23 story.

Operator

Thank you. Our next question comes from the line of Cecilia Furlong with Morgan Stanley. Your line is now open.

Calvin — Morgan Stanley — Analyst

Thanks for taking the question. This is Calvin on for Cecilia. Just two quick ones for me. The first is just could you share with us your thoughts on what your M&A strategy for FY ’22 is going to be? Do you anticipate remaining kind of active on that front in ’22 and beyond? And the second is just, could you give us an update on STEMI DTU, on kind of what the pace of enrollment has been on — perhaps on full enrollment timing to the extent you can share? Thanks so much.

Todd A. Trapp — Vice President and Chief Financial Officer

I’ll take the first question with regard to M&A. Obviously, if you look at our cash deployment strategy, I think our top priority remains investment in organic growth opportunities that we believe lay the groundwork for sustainable growth. With that said, we’ll continue to look at new technologies and core competencies. As of the last quarter, we still have a little over $100 million investment on our balance sheet in roughly 15 to 18 companies. And we’ll, again, continue to look for differentiated technologies that can either increase Impella utilization, improve patient outcomes, anything around access closure and monitoring. But ultimately, we’re looking for technology that can bring additional value to our patients, whether in the cath lab, ICU or CCU.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Calvin, on the STEMI DTU, we added six sites in Q4, and we enrolled 28 patients in Q4. So we’re now at 61 patients enrolled in 26 hospitals.

Calvin — Morgan Stanley — Analyst

Got it. Thanks so much.

Operator

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

Danielle Antalffy — SVB Leerink — Analyst

Good morning, guys. Thanks so much for taking the question. I actually just have one question, and it’s tied to longer-term growth. So I appreciate your giving fiscal 2022 guidance today. I know you’re not going to give us fiscal ’23 guidance today. But at a high level, if you could comment qualitatively, fiscal 2022 is still facing some odd comps with COVID and the recovery and things like that. So I guess, as we look longer term, what’s the right way to think about the underlying growth profile of the company? Should we be thinking about it in line with sort of end cardiogenic shock and high-risk PCI volume? Or between now and, say, this time next year, do you feel like you guys are making progress among some of the sort of — I don’t know if it’s too dramatic to call them deniers or the folks that were impacted by the AHA data, that we should see underlying growth acceleration? I know that’s really difficult to answer, but even any qualitative comments would be helpful.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Danielle, I would say at a high level, Abiomed 2.0 expects to be one of the fastest-growing profitable medical device companies, and we have been for the last 10 years. And we think between our existing products and new products, existing indications, new indications and potentially stronger guidelines in existing countries and new countries, we have a decade ahead of us of growth.

Danielle Antalffy — SVB Leerink — Analyst

Thanks so much.

Operator

Thank you. There are no further questions. I would now like to turn the call over to Mike Minogue for closing remarks.

Michael R. Minogue — Chairman, President and Chief Executive Officer

Thanks, everyone, for the time today. Sorry, it went over. If there’s any follow-up questions, please feel free to reach out to us. Have a great day.

Operator

[Operator Closing Remarks]