ABIOMED, Inc. (ABMD) Q1 2023 Earnings Call Transcript

ABIOMED, Inc. (NASDAQ: ABMD) Q1 2023 earnings call dated Aug. 04, 2022

Corporate Participants:

Nicole Nath — Manager of Investor Relations

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

Todd A. Trapp — Executive Vice President and Chief Financial Officer

Analysts:

Brandon Vazquez — William Blair — Analyst

Marie Thibault — BTIG — Analyst

Pito Chickering — Deutsche Bank — Analyst

Chris Pasquale — Nephron Research — Analyst

Matt O’Brien — Piper Sandler — Analyst

Mike Polark — Wolfe Research — Analyst

Jayson Bedford — Raymond James — Analyst

Calvin Chu — Morgan Stanley — Analyst

Presentation:

Operator

Good day, and thank you for standing by. Welcome to the Abiomed FY 2023 Q1 Earnings Call. [Operator Instructions]

I will now turn the conference over to Nicole Nath, Head of Investor Relations. Please go ahead.

Nicole Nath — Manager of Investor Relations

Good morning, and welcome to Abiomed’s First Quarter Fiscal 2023 Earnings Conference Call. This is Nicole Nath, Head of Investor Relations, and I’m here with Mike Minogue, Abiomed’s Chairman, President and Chief Executive Officer; and Todd Trapp, Vice President and Chief Financial Officer. The format for today’s call will be as follows. First, Mike will discuss first quarter business and operational highlights, and then Todd will review our financial results, which were outlined in this morning’s press release. After that, we will open the call to your questions. During the call, we will discuss certain financial information on a non-GAAP basis.

This non-GAAP information is provided to enhance your overall understanding of our current financial performance. The presentation of this additional information should not be considered in isolation or as a substitute for results or superior to results prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP results are presented in the tables accompanying our earnings release. Finally, I would like to remind everyone that today’s call includes forward-looking statements. The company cautions investors that any forward-looking statements involve risks and uncertainties and are not guaranteed in the future. Actual results may differ materially due to a variety of factors identified in our earnings press release and our most recent 10-K and 10-Q filed with the SEC. We do not undertake any obligation to update forward-looking statements.

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

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

Thanks, Nicole, and good morning, everyone. In the first quarter of fiscal year 2023, Abiomed delivered a company record of $277 million in revenue, up 10% on a reported basis and up 12% in constant currency year-over-year with quarterly records across the U.S., Europe and Japan. Abiomed has achieved record revenue in five of the last six quarters despite ongoing headwinds with COVID variants, hospital labor shortages, supply chain constraints and most recently, contrast media shortages. Abiomed 2.0 has proven to be resilient because our technology and 24/7 hospital support addresses the growing epidemic of heart disease in multiple emergency patient populations in the cath lab and surgical suite. Within the quarter, we supported a record number of patients in the U.S. and had the second highest patient utilization in Europe and Japan.

We remain focused on innovation and strengthening clinical evidence, investing $41 million in research and development while achieving 23.8% operating margins. Our IP portfolio continues to grow with 1,487 patents and 1,610 patents pending. We ended the quarter with just over $1 billion in cash and maintained 0 debt. Additionally, this morning, we announced a new $200 million share repurchase program, a component of our capital deployment strategy upon completion of our anticipated closure of the prior $200 million plan. Our continued strong financial and operational performance is a result of our disciplined execution of our Abiomed 2.0 playbook which enables us to innovate breakthrough technology, advanced clinical research and support record levels of patients in this dynamic environment.

For today’s call, I’d like to highlight the continued strength of our surgical products, driven by heart recovery with Impella 5.5. Second, we will review publications of clinical data that validate the benefits associated with Impella-supported PCI procedures. And finally, we will cover the progress we’ve made in our pursuit of classroom guidelines with multiple pivotal trials. Starting with surgery. In the U.S., surgical revenue grew 49% year-over-year, driven by a 66% increase in Impella 5.5. This revolutionary surgical heart pump with SmartAssist provides unique advantages for the chronic heart failure patient population suffering from cardiogenic shock.

As presented during our June investor call with Dr. Jane Wilcox and Dr. David D’Alessandro from Northwestern Memorial and Mass General Hospital, respectively, this game-changing technology has improved patient outcomes with 75% survival rate across all indications and 60% of patients returning home with their native hearts. These outcomes are particularly meaningful because these patients previously faced irreversible heart failure, which ultimately would have required a durable, implantable LVAD or heart transplant. I encourage all investors to watch this webcast on our Investor website. In Japan, we continue to find success with our controlled rollout of the Impella 5.5 with overwhelmingly positive surgical feedback.

We’ve witnessed survival rates and duration of support similar to that in the U.S. in the early stages of our product launch. We anticipate the expansion of this innovation to new sites and surgeons in Japan, setting a stage for heart recovery in surgery and protocols for the future. Turning to recent clinical data. RESTORE EF, a prospective multicenter study evaluating best practices in contemporary high-risk PCI practice, will be published later this month in [Indecipherable]. It was most recently presented as an abstract at a large Cardiology meeting. At their 90-day follow-up, study participants had a 29% relative improvement in their baseline LV — left ventricular ejection fraction, an overall 76% reduction in New York Heart Association Class III and Class IV heart failure symptoms and an overall 97% reduction in Canadian Cardiovascular Society Class III or Class IV angina symptoms.

The RESTORE EF study combined with PROTECT 1, PROTECT II and PROTECT III FDA studies and multiple independent physician studies demonstrate definitive proof that Impella-supported high-risk PCI can lead to a more complete revascularization and considerable left ventricular ejection fraction improvement, which improves heart function and quality of life for the patients. AMI cardiogenic shock has one of the highest mortality rates in the field of medicine. These are patients sometimes showing up at the hospital, getting CPR and rush to the cath lab.

The survival rate has remained approximately 50% without Impella and associated best practices for the last 20 years. Impella technology is designed to not only improve survival but enable heart recovery. Impella best practices such as placing Impella pre-PCI show before the physician places stents, it’s been developed by the recognized physician experts in the field of circulatory support and is published in multiple clinical studies over the last decade from the United States, Germany, Italy, Denmark and now Japan. In May, the International Journal of Cardiology published a meta-analysis of Impella pre-PCI versus post-PCI implantation in AMI cardiogenic shock.

This publication summarized 13 papers, totaling 6,810 patients and demonstrated a statistically significant lower mortality with Impella implantation before the PCI or the physician placing stents. Multiple Impella studies demonstrate greater than 70% survival with greater than 90% native heart recovery. Heart recovery after AMI cardiogenic shock improves patient quality of life and makes Impella one of the most cost-effective therapies in the CMS Medicare population as well as private insurance. Lastly, I’d like to highlight our progress towards advancing clinical evidence through multiple pivotal trials. We had a record quarter for patient enrollment for both PROTECT IV and STEMI DTU. Starting with PROTECT IV. In Q1, we rolled — enrolled 91 patients. PROTECT IV is one of the most comprehensive studies ever done in the cath lab. This landmark trial will compare the benefits of an Impella-supported high-risk PCI versus high-risk PCI without Impella support.

Researchers will measure complete revascularization, improvement in patient quality of life and ejection fraction. For the STEMI DTU pivotal trial, we enrolled 45 patients in Q1. If successful, this trial could expand our indications into heart attack patients without cardiogenic shock, which represents a 200,000 patient population in the U.S. and four million patients worldwide that we do not treat today. I’m also excited to announce that in July, we received FDA IDE approval for RECOVER IV. This is an FDA randomized controlled trial comparing all-cause mortality of 30 days in patients with STEMI, cardiogenic shock with an Impella-based treatment strategy initiated prior to PCI versus a non-Impella-based standard of care treatment strategy.

Our teams have worked closely with the FDA to generate a protocol focused on exception from informed consent or EPIC, which we believe will help enroll patients in what has historically been a difficult patient population to enroll due to ethical and logistical concerns. The study details are posted in our earnings slides. Our current RCTs are built off a decade of prior studies and best practices with the goal of achieving Class I guidelines, the highest level of medical guidelines for high-risk PCI, cardiogenic shock and STEMI. If successful, we believe we’ll be the only company in medtech with exclusive FDA approvals, a dedicated IP portfolio and Class I guidelines. Before concluding, I’d like to share a patient story. Ethan Bradshaw, 30 years old, is a state trooper from North Carolina. Motivated by a family history of heart disease, Ethan takes pride in living a healthy lifestyle.

He exercises several times each week and is a Brazilian Jiu-Jitsu instructor. On February 24, 2022, after experiencing chest pain and numbness in his arm at the gym, Ethan drove himself to Kernersville Medical Center. Upon arrival in the emergency room, Ethan collapsed. Medical personnel shocked Ethan multiple times and performed CPR before transferring him to Forsyth Medical Center in Winston-Salem, North Carolina. Ethan was in cardiogenic shock when he got to the catheterization lab with a reduced ejection fraction of 20%. So his heart was working about 1/3 of its strength. Dr. Samuel Turner implanted Impella CP with SmartAssist before the PCI and placing stents. After two days of support, Ethan’s heart function showed dramatic improvement and the Impella was weaned and removed utilizing SmartAssist.

After three weeks in the hospital, Ethan returned home with his native heart. Ethan’s heart function returned to normal, and in May, he returned to the line of duty. In July, five months after his heart event, Ethan and his wife, Makela, welcomed a baby boy, Ryan. Today, Ethan and Makela are visiting our headquarters in Danvers where they meet with employees and share their inspiring story of heart recovery as part of our Annual Patient Summit. In conclusion, at Abiomed, we are developing a new field of heart recovery and relentlessly pursuing better clinical outcomes and Class I guidelines. In Q1, we made progress toward our goals and remain focused on developing smaller, smarter, more connected devices, accelerating enrollment in key clinical studies and building commercial excellence as we continue through our fiscal year. I would like to thank our employees and customers for their commitment to advancing the standard of care and recognize our shareholders for their continued support.

I will now turn the call over to Todd Trapp, our CFO.

Todd A. Trapp — Executive Vice President and Chief Financial Officer

Thanks, Mike, and good morning, everyone. In Q1, we delivered record revenue of $277 million, up 10% on a reported basis and 12% in constant currency versus prior year, with strong growth across the U.S., Europe and Japan. We executed our Abiomed 2.0 playbook to deliver these record results despite tough year-over-year comparisons and headwinds from hospital labor shortages, contrast media supply constraints and foreign exchange rates. During the quarter, we saw the U.S. dollar continue to strengthen, which resulted in a more unfavorable impact on revenue compared to exchange rates at the time of our last earnings call and a 2-point impact on first quarter revenue versus prior year.

Starting with the U.S. Total revenue increased 9% year-over-year to $227 million despite the challenging environment due to a 6% growth in patient utilization and favorable sales mix. As a reminder to investors, we grew revenue 54% in Q1 of last year. AMI cardiogenic shock continues to perform well with 10% growth in the quarter on top of 41% growth in the prior year. High-risk PCI was down 1% due to challenging comps of 51% growth in the prior year and the impact from both hospital labor shortages and contrast media supply. Our U.S. surgical products had another strong quarter with 49% revenue growth, driven by continued demand for the Impella 5.5 with SmartAssist. At the end of our fiscal Q1, Impella CP is in 1,598 sites in the U.S. The Impella 5.5 is now in 444 sites, up 48 sites versus the prior quarter out of the potential 1,100 hospitals with surgical suites. Lastly, the Impella RP is in 675 sites.

Details of our product installed base are summarized in our quarterly slide deck. Our U.S. reorder performance in the quarter was 101%, in line with the prior quarter and prior year. Average combined inventory at the hospitals for the Impella 2.5 and CP with 4.9 units per site, flat with the inventory levels we saw last quarter. Outside the U.S., revenue totaled $51 million, up 11% versus prior year on a reported basis and 27% in constant currency. European revenue increased 19% year-over-year in constant currency on top of 50% growth in the prior year due to patient utilization and favorable sales mix. We continue to see strong patient growth in countries and regions like Italy, Belgium, Austria and the Middle East.

Our Japan business delivered revenue of $13 million in the first quarter. Revenue increased 39% year-over-year in constant currency, a new record, driven by a 25% growth in patient utilization and site openings. In the quarter, we opened eight new sites, bringing our total to 199 out of the potential 450 sites. This compares to the four site openings last quarter and five site openings in Q1 of 2022. Gross margin in Q1 was 81% compared to 82% in the same period of the prior year, primarily driven by lower production volume and manufacturing investment to support our future sales growth. R&D expense for the first quarter totaled $41 million, up 7% year-over-year.

The increase was driven by the investment in both PROTECT IV and STEMI DTU randomized control trials associated with site openings and patient enrollment, partially offset by a reduction in our contingent consideration liability. SG&A expense for the quarter totaled $118 million, an increase of 14% versus prior year, driven by headcount additions to our commercial team, our patient therapy awareness campaign and continued training and education. Non-GAAP operating income was $66 million in the quarter, which translated to non-GAAP operating margin of 23.8% versus 26.2% in the prior year.

The variance is due to ongoing investments in innovation, clinical research and commercial excellence as we pursue our goal of becoming the global standard of care for hemodynamic support. Non-GAAP net income for the quarter was $57 million. This translated to earnings per share of $1.25, an increase of 14% versus Q1 of 2022. Our year-over-year performance was driven by higher interest income, an adjustment to the carrying value of our strategic investments and a lower effective tax rate. In the quarter, we generated $68 million of operating cash flow and ended June with just over $1 billion of cash in marketable securities. Our top priority for cash remains supporting organic growth initiatives and strengthening our intellectual property advantage. In terms of guidance, keep in mind that our fiscal year experiences seasonality.

Our Q2 is usually a slow quarter for all cardiovascular devices due to a summertime slowdown in the cath lab. We expect Q2 revenue to be in the range of 12% to 14% on a constant currency basis. This translates to a modest decline from our Q1 record revenue performance of $277 million, primarily due to a $2 million to $3 million of sequential FX headwinds at current rates. In addition, we anticipate this summer quarter to be impacted by extended vacation from physicians, nurses and our workforce, coupled with ongoing hospital labor shortages. As we transition to the back half of the year, we typically expect to see sequential lift in Q3 based on increased hospital activity and physician engagement.

And as we finish the fiscal year, our March quarter, we expect to deliver our best results. As noted in this morning’s earnings release, we are maintaining our full year constant currency revenue guidance of 13% to 17% growth. At current FX rates, we now expect reported growth rates to be 10% to 14% for the fiscal year. This guidance continues to assume that COVID moves more to an endemic state and that future ways do not have a material impact on the business and hospital labor shortages begin to moderate as we move into the second half of the year. We are also maintaining our full year operating margin guidance of 23% to 24%. In summary, we delivered a strong first quarter through disciplined execution of our Abiomed 2.0 playbook despite the challenging environment. We remain focused on executing our fiscal year 2023 goals on innovation, clinical evidence and commercial excellence 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] Your first question comes from the line of Margaret Kaczor with William Blair. Please go ahead.

Brandon Vazquez — William Blair — Analyst

Hey, everyone. This is Brandon on for Margaret. Thanks for taking the question. Just looking towards this fiscal 2023 was really encouraging, great results and able to really hold that guide. A lot of the medical device peers are kind of seeing a slower recovery than they would have starting the year. So curious if you guys have any comments on that? And kind of what’s sticking out for you guys that’s allowing you to hold that guide and giving you confidence in that guide despite what seems like a slightly slower recovery than much of the industry is seeing?

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

Hi, Brandon, this is Mike. Thanks for the question. Our forecast put a little bit of an opportunity for things to happen, good and bad. I think most people were surprised a little bit with the contrast media shortage. It definitely impacted a little bit of our revenue as well. But we are, as a business, have an elective business with high-risk PCI, but we also have an emergency business. And as you can see from Q1, we’re double-digit growth because of our emergency patients in the cath lab and surgical suite. And we are confident high-risk PCI is going to come back, and it always does, and that will be further upside. But what’s also exciting for us and for the year is every quarter that goes by this fiscal year, we get closer to more launches, more new products and more clinical data.

So the RPIJ will be available by the end of our fiscal year, will be a new product for surgeons for right heart failure. We’re excited to launch the LP sheath. To remind everyone, this is a smaller sheath that’s compatible with single access. It’s going to reduce the hole by a French 1.5. I think it’s going to be very helpful for high-risk PCI and overall shock patients treated in a cath lab. We know access is a big issue for people, and we’re very positive and excited to have that product in the U.S. market. We’re going to have a Breethe launch at the end of the year. So again, this is probably one of the best devices for ambulation. It’s the smallest of the size of basically a briefcase and we’re very confident in the blood compatibility and durability. We did do our second patient on BTR during this quarter, but we’re going to have more progress on that.

And hopefully, through the EFS, we’ll be able to start generating revenue with reimbursement as a category B by the end of the year. And of course, we’re taking the opportunity right now for the IRBs and the administrative legal contracts to continue to enroll in ECP because we’re in the pivotal protocol. And we’re going to make enhancements as we go forward. So we feel like we’re in a very good place going into Q2 and very confident in the year not just because of the clinical data, but also the new innovation coming.

Brandon Vazquez — William Blair — Analyst

Thanks, Michael. And just as looking in the surgery side and 5.5, I mean those two continue to put up great growth numbers despite what’s getting a larger business and the comps keep getting a little bit harder. Can you just talk about what’s driving the underlying momentum there? Where is growth coming from? Is it coming from new accounts? Is it coming from going deeper into existing accounts, maybe it’s a little bit of both. But what are we — what can we expect from that — those two products or product in that segment and how should they trend through the rest of the year? Thanks.

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

Great. Thanks. So there’s a population out there that’s not AMI shock, but chronic heart failure shock or acutely decompensating heart failure shock. So these are the frequent flyers then and what’s happened is the Impella 5.5 has become the go-to product. So you have these 7-year-olds coming in, they’re not — they didn’t take their inotropes or their diets off and they’re decompensating. And this gives the surgeon the ability to put something in minimally invasively through the axillary. So less than an hour, patients can get up and walk around. The device has sensors, and they can get these patients back to what’s baseline or acute recovery while protecting the heart, unloading it and giving renal perfusion to the kidneys. So it’s really been a great product. It is a revolutionary product because now you have a minimally invasive weanable heart pump.

All prior heart pumps required a sternotomy, and then you have to core out the apex of the heart, and then you bypass the blood out of the heart right to the aorta. So it’s not ideal for older patients or patients that want recovery. For your question of where the volume is coming, it’s more patients, it’s more centers. The device does run longer. In the engineering bay, it runs extensive periods of time. And it really has transformed heart failure in the heart team to try to recover these chronic patients and protect their kidneys. I would encourage all investors to watch Dr. David D’Alessandro and Dr. Jane Wilcock, both from Northwestern and Mass General because they really go deeper in that question, and they show some live cases. So I hope everyone has the opportunity to see that.

Operator

Your next question comes from the line of Marie Thibault with BTIG. Please go ahead.

Marie Thibault — BTIG — Analyst

Hi, Michael, thank you so much for taking my question this morning. I wanted to start here with a quick question on sort of the contrast media shortage impact. I wonder if you could size that for us, quantify it for us? And where it is now? Do you feel that it’s been fully resolved with most of your centers?

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

Thanks, Marie, for the question. As we talked about each quarter, we’ve had a positive evolution of our customer base during COVID because the smaller hospitals had to pick up more of the work relative to emergency patients and also even the high-risk PCI. And we — that’s how we’re able to maintain positive growth during the first year of COVID. That trend has been continuing. However, what we saw in the quarter was that the smaller centers didn’t have access to the contrast. And that’s what potentially impacted a little bit of our high-risk PCI. Todd can give the numbers on it, whereas the bigger centers had access. So it was spotty. It was all over the U.S. And we believe that the majority of that is behind us. But certainly, we’re going to continue to monitor the situation. Todd, do you want to comment on the numbers?

Todd A. Trapp — Executive Vice President and Chief Financial Officer

Yes. So Marie, to the best of our ability, we think it’s somewhere around 150 plus or minus a few, but 150 patients in the quarter, which obviously would have impacted our overall patient growth by about two points. And as Mike mentioned, it mostly occurred in our high-risk PCI business. And so again, if you think about what we reported, that’s an additional 150 patients, it’s worth about five points of growth on high-risk PCI. So that’s — to the best of our ability, that’s how — what we came up with as the impact from contrast media in Q1. And as Mike mentioned, it was mostly at the smaller hospitals.

Marie Thibault — BTIG — Analyst

Wow, that’s really great detail. Thanks for that. And then here, my follow-up, I wanted to talk a little bit about your operating spend. You’ve had some very nice control on R&D. And I think I heard that your manufacturing — you’re investing in manufacturing and adding sales head count. So I wanted to hear a little bit more about where those new sales reps are going to be focused? What areas you’re expanding capacity, manufacturing capacity and how you achieve some of that R&D control? Thanks for taking the question.

Todd A. Trapp — Executive Vice President and Chief Financial Officer

Yes. So Marie, in terms of sales heads for the quarter, I think it was somewhere in that 18, 19 heads. We continue to, I would say, invest more on the surgical account team, just given where we are from a penetration standpoint. We’re at 440 hospitals out of the 1,100. So that’s really where, I would say, some of our investment went on the commercial team. We are still, I would say, looking to potentially go to a few more regions, a few more franchises. And again, that boded well for us during COVID as you know, that we grew smaller hospitals at a faster clip just because we had more feet on the ground. With regards to gross margin, it’s 81% in the quarter. Again, we are adding a little bit more, I would say, on the hourly workers as we think about ramping up our volume in the second half of the year.

Operator

Your next question comes from the line of Pito Chickering with Deutsche Bank. Please go ahead.

Pito Chickering — Deutsche Bank — Analyst

Hey, good morning, guys. Thanks for taking my question. Can we sort of talk about the Impella ECP trials for a minute, get some updated enrollment numbers there, if possible? And then from a product perspective, any major revisions to hardware software during the quarter?

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

Sure, Peter. This is Mike. Thanks for the question. On the ECP, we’ve closed out the early feasibility protocol. And in March, we had the pivotal protocol approved. So we’re continuing to enroll patients. We’re collecting all that data. We’re going to utilize all that data in our submission. The IRB process and the legal administrative work at hospitals across the Board for those that don’t follow this is a lot more complicated and at the best, it’s at the 3-month and a norm, it can be six months. So as we’re working through that, we have three IRBs approved, but we don’t have a single site that has approved the site activity. We are making — taking the opportunity to make a few enhancements that we’ll continue to make on the product and we’ll do that throughout the pivotal. So that’s — that part will happen. That’s the benefit of doing this early feasibility. That’s also the benefit of working with the FDA on something that has, again, breakthrough designation status as a product.

Pito Chickering — Deutsche Bank — Analyst

Okay. Great. And then Europe and Japan show very strong growth year-over-year and actually accelerated sequentially. Just curious is there some more details on those markets and what do you assume within your guidance for the rest of the year?

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

Yes. The Japan market is ideal for our focus around native heart recovery. By providing now the Impella 5.5, we allow the heart surgeons to have a longer-term pump, a device that in the engineering base gets run over a year. The Japan protocol is they tend to keep their patients in the hospital. And with their focus on myocardial recovery and stem cells, we are going to be coordinating and partnering with those institutions where we’ll do extended unloading with 5.5, which we know immediately shrinks the left ventricular geography or geometry of the left ventricle. We know we get — we rest the heart. We also know we get renal perfusion. So we’re going to be doing continued advanced protocols now for getting back these chronic patients. And the society and the physician community there is very excited about this [Indecipherable] research. And we’ll be there in October, I’ll be there in October. And we’re out, again, traveling. The shows are up and running. And so we’re in Japan, we’re in Germany, and we’re all over the U.S. and progress and the research is moving forward.

Operator

Your next question comes from the line of Chris Pasquale with Nephron Research. Please go ahead.

Chris Pasquale — Nephron Research — Analyst

Thanks. Congrats on getting RECOVER IV approved and making some nice progress on the other studies this quarter. That’s great to see. Mike, it’s been challenging to do randomized trials in cardiogenic shock, and prior attempts have ended up with some messy data. I see that you got an exception from informed consent, which should help with enrollment. But are there other things you’ve done with the design of this trial to ensure that you end up with a well-balanced trial and a clean look at the clinical value of Impella in that population?

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

Sure, Chris. So the Abiomed has attempted all of the cardiogenic shock studies in this space. In 2008, 2009, we did RECOVER II in the U.S. And as you mentioned, we’re only able to enroll one patient that was based on the ethical logistical challenges back when people thought the balloon pump did more flow. In Europe, they’ve been able to consent these patients because they do have an exception. They can have two physicians make a decision where they don’t have to go to somebody getting CPR or find a family member to consent the patient. That was the CULPRIT study that showed that mortality is 50% when you don’t have a protocol in place and you try to bail these patients out. And it was also the SHOCK II study, which was published in the New England Journal of Medicine, that was a balloon pump.

And that showed the balloon pump not only had zero benefit in clinical outcomes, it did not even improve the hemodynamics because the hemodynamics for the balloon pump is generated by inotropic drugs, which work, but they work the heart harder and they also cause arrhythmias, which makes a balloon pump not working almost detrimental and dangerous. So now we’ve tried IMPRESS. We tried multiple times in Europe. We tried to [Indecipherable]. All of those studies started with the concept of randomization. None of those studies were actually randomized. Because as they got further into the study, the physicians felt it was unethical or the consent was too difficult. So they just started they would — they’ve ended up not being — they’re not randomized studies despite the fact that some of the authors of certain publications say they are. They’re not — there are studies we funded them.

So we went to the FDA, and we’ve been working with them now for 1.5 years, two years. They are the authority on these — on what’s called EPIC exception for informed consent. They are the ruling body as far as an authority. They work with us to get that step that they can now consider patients in cardiogenic shock can utilize the EPIC channel. However, we still need the local IRBs to approve it. And we also need the physicians to do it. We recognize not all physicians will randomize these patients. However, they’re the leaders in the space, the published leaders in the space, the ones that treat these patients have developed this best practice protocol, which they’ve also published and they want to pursue this study. And what’s new is that a lot of these centers, some of them use ECMO as first pass as the way they treat shock, not just oxygenation.

So in the other arm, they’ll have the option to do ECMO, anyone’s ECMO. It will actually be the first study ever done with the FDA that will measure the adverse events of ECMO and ECMO has life-saving components to it and it oxidases the body, but it’s not ideal for cardiogenic shock where you have a hemodynamic problem and actually can cause other issues. So that will be in the other arm. Oxygenation will be a protocol. And really, the customer base will determine with RECOVER IV their ability to randomize, their ability to execute. And this is where all of these other studies that we’ve been doing around pre-PCI. We feel like we have the formula for success. This best practice protocol on Impella for shock of identifying shock really putting Impella in before the PCI, looking for right heart failure and monitoring hemodynamics has now been published and duplicated over a decade. So we’re excited to do RECOVER IV.

Chris Pasquale — Nephron Research — Analyst

Thanks. If I remember correctly, one of the issues with IMPRESS was also that a lot of patients who got enrolled already had some evidence of brain injury at admission. So we’re getting to them too late. Is there anything to deal with that issue and try and make sure that these patients still have a chance at the time they’re getting support?

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

Sure. So there were 48 patients, 24 of the patients got Impella. The majority of those patients, only four got Impella before the PCI, four out of the five list. So we have an 80% survival in the IMPRESS. Unfortunately, they stopped randomizing. 15 patients within the 48 were not randomized and were not sequential. And more than half of these patients were in cardiac arrest, which is not ideal that this is not a cardiac arrest pump. And many of them got randomized after they had done the PCI and even had a balloon pump in. So that IMPRESS and severe shock is really cardiac arrest. The original IMPRESS that we only did 18 patients was that protocol, and we’re looking to rule out cardiac arrest from the study.

They will not be in the RECOVER IV protocol. And as you know, Chris, there’s a range of mortality in shock and the society, interventional cardiologist guy has a class from A through E. Then you can have a range of mortality at 3% in E and you can have an 85% mortality rate in Stage E. So it really is that metric. And that’s one of the challenges with these databases that they — when people write a [Indecipherable] data from seven years ago, is the balloon pump arm is biased because the patients that get sick on the balloon pump come out, either they will go to ECMO and are ignored. In ECMO, you’ll notice is not in these analysis by people that are pulling databases or they go into the Impella arm. And they’re now in the Impella arm but they don’t disclose that. And it also includes balloon pump patients that get bailed out in the Impella arms. So we have all the data. The world’s experts are writing our papers in our protocols, another one to treat that, but to the folks that want to put out databases, we encourage them to publish their own data and come join our studies and randomize.

Operator

Your next question comes from the line of Matt O’Brien with Piper Sandler. Please go ahead.

Matt O’Brien — Piper Sandler — Analyst

Good morning, thanks for taking the question. Just for starters, Mike, to put a finer point on 5.5, I mean that was a meaningful acceleration sequentially with that product. You’ve talked a little bit about centers and utilization, but can you just put a finer point on what you’re seeing as far as some of the centers that have been using 5.5 for maybe a year now as far as their trends? And then are these new systems and centers that are coming on, are they adapting even faster just based on what some of the other centers are seeing as far as outcomes?

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

Yes. Thanks for the question. I guess the best way I’d answer that is encourage everyone to watch the webcast we did with the experts because they go into detail and show some of the examples of why they now use 5.5, whereas in the past they might have done lots of either inotropes or considered patients for LVADs or transplant. I do think you pointed out, it’s still growing. And what’s most gratifying to see is that with the volume you’re also seeing the high survival rates, high recovery rates are being maintained. I believe the Impella 5.5 is a full VAD. It has as good a flow or better flow than all the other VADs from the past because it’s forward flow. And it really does now add to the ability not just to get the patient often better and wean the heart, but we routinely see now patients that have bad kidneys come back, the kidneys recover.

And what’s also interesting is patients that don’t get better, that their cardiomyopathy is to advance, we do see them listed for heart and kidney transplant. And during the 2- to 4-week weight, we see the kidneys also come back. So now these patients are just getting a heart transplant, and they don’t require a kidney transplant. So there’s more research and clinical data to come but it’s clearly a breakthrough product. And again, for those that have covered the LVAD space, there’s not anything in the world like the Impella 5.5, a minimally invasive weanable forward flow heart pump. And it’s really — it’s a great tool for the heart surgeons, especially with the emergency population today that they don’t know what to do, that’s one of the biggest admissions into the hospitals.

Matt O’Brien — Piper Sandler — Analyst

Got it. And then just wanted to put another finer point on ECP. I think you’ve got the pivotal study going with the EFS as well. I think collectively because you can include those EFS patients in the pivotal. So you’re up to 31 patients total. Just want to make sure that’s right. And then you’re making some tweaks to the product, there’s no delay in the product. You’re still expecting kind of just the same time lines as you were expecting before? Is there — I just want to make sure that, that’s clear. Thanks.

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

Yes. Thanks for the questions to clarify ECP. So the EFS study closed out after 26 patients. In March, we got the IDE pivotal protocol approved. So we’re now collecting data on ECP using the pivotal protocol. While we’re getting all the centers up for IRB and the legal activity site contracting, we are making some enhancements, but we’re still collecting data, and we did five cases in Q1. And that data is under the pivotal protocol. So we’ll absolutely be utilizing that. Remember, it’s a single-arm study up to 217 patients. And what we’re trying to show is it’s as safe [Indecipherable] our PCI as the Impella 2.5 and CP that we have data from the PROTECT II and PROTECT III.

Operator

Your next question comes from the line of Mike Polark with Wolfe Research. Please go ahead.

Mike Polark — Wolfe Research — Analyst

Good morning, thanks for taking my question. I will follow up on that. The enhancements, Mike, can you just maybe shed a little more light on what that means, what enhancements are being made? And how significant or not are they for the ECP product?

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

Well, we’re — we make constant enhancements, Mike, and for competitive reasons and all the things we’re doing, we don’t disclose those. But we’ve been making enhancements and improvements on their products since the very first patient over a year ago. One of the benefits of being in an early feasibility study is that gives you that flexibility. The other benefit of having a breakthrough designation is that you can make these enhancements as you go. We’re confident in the enhancements that are lined out and — but we’re always going — and we’ll continue to make enhancements as we go through the study and we’ll continue to file more patents around everything we do.

Mike Polark — Wolfe Research — Analyst

If I can for my follow-up ask on 5.5 and just kind of center activations in the U.S., 440 round numbers centers in the June quarter. We have the data you’ve provided in the past on 5.0 is in 660 centers, but there’s 1,100 surgical suites in the U.S. I guess, as you roll this forward over the next couple of years and continue to commercialize 5.5. And — will the kind of center network stop at the 5.0 level? Or do you think there’s a good chance that you’re in more centers eventually with 5.5 than you were on 5.0? Thanks for taking the questions.

Todd A. Trapp — Executive Vice President and Chief Financial Officer

Yes, Mike, this is Todd. I’ll just — I’ll answer that one. In terms of the 5.0 sites, if you just went back and looked at the last several quarters, we really haven’t opened up many 5.0 sites. Every new site we open up now is going to be with 5.5. And so if you just went back and looked at the last three or four quarters, we’ve been averaging somewhere between 45 and 50 site openings for 5.5. And I think that should continue, I think, in the next several quarters, that cadence. So I don’t think you’re going to see us opening many more sites with 5.0, it’s just going to be more going forward with 5.5. And again, we have 1,100 hospitals with surgical suites in the U.S. We have a long runway of growth ahead of us just with the 5.5.

Operator

Your next question comes from the line of Jayson Bedford with Raymond James. Please go ahead.

Jayson Bedford — Raymond James — Analyst

Hi, good morning. Just one for Todd and then a couple for Mike. Todd, on the contrast dynamic, I appreciate the detail there, but just the missed patients in 1Q, are these patients unfortunately lost? Or do you think these procedures spill into 2Q?

Todd A. Trapp — Executive Vice President and Chief Financial Officer

It’s a great question, Jayson. I think it’s something we’re trying to measure ourselves. I think unfortunately, there’s probably a portion of those patients that might have been staged and not obviously coming back into the cath lab, but we think a portion of them will come back at some point in time. Again, similar to what we’ve seen over the course of the pandemic that these patients aren’t “essential”, I mean, elective, they’re essential and they need to be treated. So we do expect some of these patients to come back into the system sometime in, I’d say, Q2. The timing of it is all, it’s tough to call, but I would say there’s a portion that we expect to see to come back in to the system.

Jayson Bedford — Raymond James — Analyst

Okay, thanks. And then, Mike, just on ECP, a couple of follow-ups. From the five patients enrolled in the pivotal protocol in 1Q, will they be included in the 217 patients needed for the trial?

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

Yes. Remember, it’s up to 217 patients. And so all the data we collect is being compared to the numbers that we know and can match on PROTECT II and PROTECT III on both Impella 2.5 and CP. And what we’re comparing is 30-day MACE, but we’re also looking primarily at access closure and safe-eval information. And so that’s what we’re working on. And we already have high-risk PCI, the indication. And we’re looking to get the ECP through that process, so we can put the ECP into PROTECT IV as well as the STEMI DTU study, which is our intent.

Jayson Bedford — Raymond James — Analyst

Okay. And when do you expect to enroll the first patient in the pivotal [Indecipherable] the pivotal protocol but the pivotal?

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

Yes. So the pivotal protocol is, the difference will be that the center now has IRB approval and all the site activity, but we are collecting the data that we will collect in the pivotal. And so we’re — that’s the benefit of doing this procedure and having the early feasibility. So we are collecting data now that we’ll be using.

Jayson Bedford — Raymond James — Analyst

Okay. I’m still just trying to reconcile the difference between the pivotal protocol and the pivotal and maybe…

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

So the difference is — the difference is we’re utilizing the pivotal protocol approval at the existing centers that were in the early feasibility study. We’re collecting the data now that was in — that will be in the pivotal that we didn’t collect in the early feasibility study. As we transition and get the site up with the IRB approval and the site activity, then that will just continue. And while we’re waiting on that, we’re making some enhancements to the product. We went out to 50 centers and the first 25 that can get through the process on the IRB will be in the study. But everything we’re doing now, the data we’re collecting will be utilized for the PMA because it is the pivotal protocol.

Operator

Your next question comes from the line of Cecilia Furlong with Morgan Stanley. Please go ahead.

Calvin Chu — Morgan Stanley — Analyst

Hi, thanks for taking he question. This is Calvin on for Cecilia. Just two really quick ones for me. First, just on — particularly on your PCI side of the business, I’m just curious how meaningful of a headwind has staffing pressures — staffing shortages been to PCI procedure volumes? Has the impact sort of intensified? Has it improved? And just what’s incorporated in your reiterate outlook around staffing impact?

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

So Calvin, the staffing issues is across the board in med tech. It impacts our essential high-risk PCI patients more than emergency. The emergency patients are priority. That’s where they go. And then what we’ve also done is try to minimize the need to go to the ICU for high-risk PCI versus CPU or step down. And so similar to other people. But the one benefit that was apparent and shown this quarter is emergency patients are the priority, they get treated, and that’s what drove our double-digit growth, both in the surgical suite and the cath lab.

Calvin Chu — Morgan Stanley — Analyst

Okay. Thanks And then the second one is on IPPS. So IPPS final rule again, was a positive outcome for you guys, and I think rates continue to be stable to slightly up following a pretty good proposed rule as well. I think specifically for DRG 3, I think it’s associated with ECPELLA was up 10%, which is a high growth number compared to, I think historical periods and also other DRG. So just curious, any read-through there? Is this a sustainable trend that we can perhaps see going forward? Thanks so much.

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

Yes. I think we’re in a great place right now for the appropriate reimbursement because the system set up by CMS and the physician experts has allowed its system of treatment for the sickest patients to be treated with DRG-1, so that’s biventricular Impella or a patient that needs oxygenation and hemodynamic support, that’s DRG-3, that’s ECPELLA, that’s around 10% to 14% of our patients every quarter, and that’s growing. And we have new software now that integrates and lets the Impella know that ECMO is on board so they can wean.

We have patients that are just getting high-risk PCI for — and to support is three to four hours, that’s DRG 216. And then, of course, we have those that are in cardiogenic shock that we’re going to acquire three to four days in the ICU, and that’s DRG 215. And last is even the hub and spoke. So our ability now as the largest distribution team and the most — the group with the most experts out there that can be bedside or it can get — the hospitals can get phone support. And again, we’re tracking nearly all our patients in the cloud in the U.S. So we have this incredible network that we’re able to also support patients that want smaller hospital and then assist in transferring that patient to a large center with the Impella already in. And that’s now the hospitals that receive that patient with Impella can bill for DRG 268. And that gives them reimbursement to monitor and manage the patient in ICU and explant the device.

So we really appreciate that the physician societies and the experts as well as CMS has really been very thoughtful about allowing heart recovery to occur. But again, Impella is one of the most cost-effective technologies that Medicare pays for and all of our FDA studies incorporate those 65-year-old patients and above. So it’s taken us many years to get here, but we’re appreciative because heart recovery can thrive now in the community. Well, thank you, everyone, for your time today. And if you have follow-up questions, please reach out. Have a great day.

Operator

[Operator Closing Remarks]