ABIOMED Inc (ABMD) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the first quarter 2012 Abiomed earnings conference call. My name is Katie and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will be conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Aimee Maillett. Ms. Maillett, over to you please.

Thank you. Good morning and welcome to Abiomed's first quarter of fiscal 2012 earnings conference call. This is Aimee Maillett of Abiomed's Corporate Communications Department. I'm here with Mike Minogue, Abiomed Chairman, President, and Chief Executive Officer and Bob Bowen, Vice President and Chief Financial Officer.

The format for today's call will be as follows. First, Mike will provide you with strategic highlights for the first quarter. Next, Bob will provide details from the financial results outlined in today's press release. We will then open up the call for your questions.

Before we begin discussing the first quarter, it is necessary to remind you that during the course of this call, we will be making forward-looking statements including statements regarding future financial performance, product development efforts, Abiomed's strategic operational initiatives, market response to our new products, our progress towards commercial growth and future opportunities.

Abiomed's actual results may differ materially from those anticipated in these forward-looking statements based upon a number of factors, including uncertainties associated with development, testing and related regulatory approvals, competition, technological changes, anticipated future losses, complex manufacturing, high-quality requirements, dependence on limited sources of supply, government regulation, future capital needs, and other risks detailed in our SEC filings.

Investors are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of today's conference call. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances that occur after the date of this conference call or to reflect the occurrence of unanticipated events.

We will be referring to some non-GAAP financial items on this call. I would encourage everyone to refer to today's earnings release for a full reconciliation of non-GAAP items for the GAAP equivalent.

Lastly, comparative references on this to call to increases or decreases of revenue, expenses, gross margin, or other financial measures relate to the first quarter of fiscal 2012 as compared to the first quarter of fiscal 2011.

I am now pleased to introduce Mike Minogue, Abiomed Chairman, President, and Chief Executive Officer.

Good morning, everyone. We are pleased to announce Q1 with 25% growth in overall revenue of $27.4 million, led by 33% growth in Impella revenue and impressive gross margins of 78%. The Impella platform continues to expand with a wave of clinical evidence, patient success stories, and US reimbursement confirmation. Their definitive steps to earning the new standard of care paradigm in the cath lab, EP lab, and surgery suite, and we are systematically pursuing each opportunity relative to the clinical need. Our goals delineate our steps and roadmap to achieve success.

Since this is the start of our fiscal year, I would like to highlight the quarter relative to our four new corporate goals. So first on goal number one, advancing Impella utilization by focusing on patient outcomes for procedures requiring prophylactic and emergency hemodynamic support. The breakdown of the reported usage was 52% for high risk PTI, 30% for AMI cardiogenic shock, and 18% for all other applications. All three segments grew double-digit year-over-year with the highest growth coming from emergency patients.

In regard to high risk PCI, the PROTECT II study is the first ever FDA study for high risk PCI study requiring hemodynamic support and first intra-aortic balloon pump FDA study overall. TO summarize PROTECT II, the Impella patients were treated more aggressively and had significantly better outcomes at 90 days. We do expect this study to be a catalyst for high-risk PCI growth and our business priority is to publish the data as soon as possible. Additionally, we have had multiple publications accepted on the USpella, Recover One, Abstracts, and further Abstracts are being submitted to TCT, our PROTECT II, and PERMIT I on EP VC Ablation.

Our second goal is quantifying the cost benefits and quality of life gains with hard muscle recovery for patients requiring prophylactic and emergency hemodynamic support. Abiomed is amassing a compelling body of clinical evidence for percutaneous hemodynamic support and heart muscle recovery, as demonstrated by the recent positive CMS coverage decision in New England. Last year, Abiomed had 26 Abstracts or publications and this year we will accelerate the pace while incorporating cost effectiveness studies on patient outcomes.

PROTECT II Incorporated, an independent economic study, on the patients tracked for hospital charges to 90 days post-discharge. The economic analysis revealed that the Impella patients already had lower hospital charges at 90 days, driven by a 47% reduction in repeat revascularization and 67% lower charges per readmission as compared to the intra-aortic balloon pump. The incremental cost effectiveness ratio, ICER, of Impella in PROTECT II is being completed for publication and a TCT presentation.

Relative to emergency patients, a recent abstract from a leading US hospital system called Pinnacle demonstrated economic benefits as well. This study reported that Impella patients have reduced ICU times, shorter length of stay, and reduced readmissions at 30 days as compared to the prior standard of care. The future trends in global healthcare will favor innovation that allows for minimally invasive procedures, improves patient quality of life, and reduces ICU time and readmissions to the hospital. For example, more people are surviving heart attacks but requiring additional therapies for the remainder of their life. Our actual heart recovery patients represent one new paradigm of cost effective treatment as evidenced by the hospitals highlighting the stories all around the country. We are very confident in our cost effectiveness data because patients want more minimally invasive options and there is no core for dead heart muscle.

Our third goal is maximizing the productivity of our commercial organization. Our go deeper strategy in the US is working and we continue to add two to four heads per quarter in the field and enhance our training programs. This quarter included our yearly one-week onsite field training meeting and six cardiology medical meetings, which reduced our overall hospital customer face time as compared to last quarter. We believe this commitment was valuable for our time and customers to fully digest the PROTECT II study and will pay dividends for the rest of the fiscal year.

Our European relaunch strategy of focusing on key accounts while leveraging US clinical data is showing promise. It is encouraging to see the 70% increase in Impella revenue outside the US, driven primarily by triple digit growth in European reorder revenue. And last, on our commercial productivity goal, we created a prospering service business, which continues to grow now that we have an install base approaching 600 US hospitals.

Our fourth goal is driving operational excellence and customer service. The new AIC console has been receiving positive feedback from users and we are expanding the number of new Impella RP sites in Europe and Canada. There is great enthusiasm for our percutaneous, right side Impella device by multiple [position] societies and the product will transform the treatment of right side heart support. This device truly has the ability to save lives based on our initial experience.

As we evaluate other markets outside the US, Japan presents a major opportunity based on the mortality rate from heart attacks and high-risk cath lab propensity. Today, we are pleased to announce that we have filed our formal Impella submission to the PMDA and the Japanese Ministry of Health and Welfare for approval in Japan. As a Company, we remain committed to leading in innovation and technology, and will be announcing specific investor updates on new Impella enhancements, new products, and Japan later this year.

After over 10,000 Impella patients, our technical leadership with miniaturized catheter heart pumps is unmatched and our intellectual property and know-how is unrivaled. In summary, we believe in the Impella platform and in our ability to execute on our goals. As a result, we forecasted a strong year of 20% plus growth in revenue. Our confidence is based on our ability to offer unique solutions to address the clinical need for percutaneous hemodynamic support and heart muscle recovery.

In simple terms, we will become the safety net in the cath lab and EP lab for multiple applications. As always, Abiomed is highly motivated to help thousands of patients and create significant shareholder value.

I will now turn the call over to our Bob Bowen, our CFO.

Thank you, Mike. Good morning, everyone. Before I get started, I would like to refer you to the Safe Harbor language noted at the outset of the call as well as the risks and uncertainties noted in our SEC filings, particularly our most recently filed 10-K. I would also like to bring to your attention the GAAP non-GAAP reconciliation that we have provided in the earnings press release, which is intended to aid investor understanding of our financial results.

As noted by Mike, we posted another strong quarter of revenue growth, up 25% from last year, which was about our 20% to 24% guided range for the year. The growth was driven by continued adoption and utilization of the Impella platform and includes strong growth in both the US and Europe. I would like to take a moment to walk through some of the changes we have made in our earnings release this quarter, which are intended to simplify and add transparency.

First, we are providing some additional clarity to what we previously called Legacy of non- Impella revenues. In recent quarters, these revenues included sales of our BVS blood bump AB 5000, related consoles of service, accessories, and funded research and development. Going forward, we will separate out service revenue, which has become a more significant and growing piece of our business. So we will be reporting in three categories, Impella revenue, service revenue, and revenue from the sale of BVS blood bump AB 5000, related consoles and accessories, and funded research and development.

I would note that the Impella revenues and service revenues have both demonstrate very strong growth for several quarters and represented 87% of total revenue in the most recent quarter. Second, we have started to report revenues in the US and outside the US. Both had 25% growth rates in the first fiscal quarter and we are starting to see some of the benefits of our efforts in Europe to relaunch the Impella platform and focus on key accounts.

Third, we have discontinued reporting US patients and reorders. Reporting patients was useful at an earlier stage in our Impella launch when we were opening in excess of 50 new sites per quarter and trying to help investors understand the business model and the underlying patient growth drivers of revenue versus new site opening drivers of revenue. However, based on recent field checks of catheter inventory levels at sites, we have learned that shelf inventory levels are lower than we had thought, confirming our belief that we are not seeing all Impella patients.

As Mike had indicated on prior calls, it has become increasingly difficult to track all patients. Given that approximately one-third of reported Impella patients are treated independently, this is not surprising. With regard to reorders, essentially all of our growth is based on reorders. Nearly all of our Legacy product revenues are reorders and approximately 90% of our Impella revenues are reorders at the current rate of new site openings. So I think the notion of reporting reorders as a separate data point is a distinction that has lots its usefulness.

Gross margin percent for the quarter was also strong at 78.5% compared to 76% in the year ago period and within the range of our 78% to 80% guidance. The improvement was primarily due to a higher portion of revenues from Impella disposables. Also, higher unit production volumes, which leveraged the fix portion of our manufacturing cost, and lower inventory reserves. A partial offset to the improvement was a higher number of console placements related to the launch of our new automatic Impella controller in January, which automates many of the console set-up routines and provides for improved patient monitoring.

R&D expenses of $7.3 million compared to $6.7 million in the prior year. Clinical trial expenses totaled $2.5 million in the most recent quarter, essentially equal to the year ago period and included expenses related to the winding down of the PROTECT II trial. The remaining R&D expenses associated largely with sustaining and new product development. Quality and regulatory efforts totaled $4.8 million compared to $4.2 million in the prior year. The increase was largely due to timing of expenditures on new product development initiatives. Total R&D costs were 27% of revenues in Q1 fiscal 2012 compared to 30% of revenues in fiscal Q1 2011.

Selling, general, and administrative costs were $18.2 million, up 15% compared to $15.8 million in the prior year, as a result of the continued build out of our US commercial organization and costs associated with the ACC, Sky, EuroPCR meetings, as well as other internal and external training and educational meetings related to the PROTECT II trial. SG&A costs were 66% of revenues in Q1 2012 compared to 72% of revenues in Q1 2011. Non-GAAP net loss as described in our press release was $1.2 million in fiscal Q1 compared to a loss of $3.1 million in the prior year. The GAAP net loss for Q1 fiscal '12 was $4.6 million compared to a GAAP net loss of $6 million in the prior year.

Looking at the balance sheet, accounts receivable and inventory performance both improved with days sales outstanding of 48 days compared to 52 days in the prior year and inventory turnover of three turns compared to two turns in the prior year. We ended the quarter with cash, cash equivalents, and short-term marketable securities of $59.1 million compared to $60.3 million at the start of the fiscal year. During the quarter, we paid $4.1 million to the PROTECT II academic research organization for billings received in the quarter, much of which had been accrued in prior quarters, and $3.7 million related to our annual incentive payout to employees for fiscal 2011 performance.

In addition, Impella inventory levels increased by $1.3 million to bring Impella inventories to desired safety stock levels. These uses of cash totaled $9.1 million and were largely funded by proceeds of stock option exercises totaling $7.6 million. Based on our current plans, we would expect to see an increase in cash, cash equivalents, and short-term marketable securities in fiscal year 2012, most of which will come in the second half. As a reminder, we have no debt and as of March 31, 2011 we had a federal net operating loss carry forward of approximately $183 million and a federal research and development credit carry forward of approximately $9 million. And we are anticipating we will be using some of these NOLs in fiscal 2013.

We are very comfortable with our cash position.

Turning to guidance, full year revenue guidance for fiscal 2012, as noted in our press release, is in the range of $120 million to $125 million, representing a growth rate of 20% to 24%. Impella revenues grew 33% in the first fiscal quarter, the midpoint of the range we guided on the last conference call of 30% to 35% for the year. All other revenues were 2% lower compared to the guided range last quarter of a decline of approximately 25% for the year. As noted on our last earnings call, we expect the positive effects of the PROTECT II clinical story to materialize in the second half of fiscal year 2012, as the clinical community digests the outcome and economic benefits. As such, we believe the quarterly revenue profile will be similar to what we experience in fiscal 2011 with approximately 45% of annual revenue in the first half and 55% in the second half. Historically, fiscal Q2 is a slow quarter. However, our current plans call for sequentially flat to slightly higher revenues driven by the Impella 2.5 in the US, partially offset by lower revenues in Europe where we do expect to see a summer slow down.

We will now open the call to questions. Operator?

(Operator Instructions) Your first question comes from the line of Tom Gunderson from Piper Jaffray. Please proceed.

Hi, good morning. Mike, sorry, I may have missed this at the beginning, but did you talk about PCI volumes at all relative to some of the stent companies were talking about the [GEM] article and over-utilization? And maybe a little counter-intuitively, I would think that that might increase, if you take out some of the softer patients, that might actually increase your penetration in the cath lab just because you have a smaller denominator. Did you see any impact so far from that volume?

Tom, thanks for the question, and yes, we do see that a little bit overall. And I would agree with you that it tends to potentially benefit us because they are looking and they're willing to take on higher risk patients. The second part of that trend that we see is surgeons are moving into a frame of mind that if patients are too risky, they're consulting and working very closely with their interventional cardiology peers. And as you see in the registry and as you saw in PROTECT II, approximately 60% of these patients are being turned down by surgeons, which is opening up more communication for more of these high risk, triple vessel, or unprotected left [main] patients.

And then as the breakdown, we did say that we saw double digit growth year-over-year in PCI and we also saw double digit growth on the emergency applications, as well as the other applications, whether that's EP-based or balloon aortic valvuloplasty.

Got it. And can you give us any updates either on the warning letter, if there is anything, or -- and did you see any advances with AF ablation? AF seems to be gaining more attention in hospitals.

So two parts to the question. First, on the FDA, we've been working with them and after thoughtful consideration on their part, we will be maintaining our mission statement and our motto of recovering hearts and saving lives. That's at the root of what we do and it's also in how we design our products and it's one of the things that really makes us unique as a Company. Nothing in the warning letter had anything to do with the patient safety or patient outcomes, or any of the things we're doing in the field to support our customer base, but we'll continue to be vigilant on how we work with them. And as you know, we've always had a strong relationship with them and have multiple products in submission or in post-market registries.

The second part of your question had to do with EP and we noted in the call that the PERMIT I, which we've highlighted in the past, is an EP study for VT ablation. It has completed and it is being independently submitted by the physicians to TCT and we expect that presentation and the publication to come in that timeframe.

Great, thanks. That's it for me.

Thank you, Tom.

(Operator Instructions) Your next question comes from the line of Greg Simpson from Wunderlich. Please proceed.

Thanks. Good morning, guys. Mike, first of all, can I ask about Japan? You've hinted at it a few times in the past but now you confirm that you filed for approval. Given that if I remember correctly, they approached you about bringing Impella to Japan, can you give us a sense what's the expectation in terms of timing, the approval time frame, things like that?

So Greg, thanks for the question and you're correct, we have mentioned in the past that we were approached by the physician societies from surgery to cardiology requesting that we bring Impella to Japan. So we have strong support and cooperation with the MHLW. So that's a very positive thing. And one of the things that drives that request is that there really is not a transplant culture in Japan. They also have a smoking population, which as a result they have higher mortality rates from heart attacks. And essentially, most of the patients are treated very aggressively in the cath lab. You see the majority, highest percentages of [IVES] as well as CTO work being done there.

So the concept of what Impella does and the miniaturization of the product really fits well into the future of that healthcare program. We are giving out a little information today, partly because this is under active review. Physicians are being consulted and we felt we wanted to get it out there publicly because it could become public information. But as I said, we'll be giving further updates later this calendar year on all the things relative to new enhancements or new products over the Japan timeline.

Okay, fair enough. Can I ask as a follow-up, would it be logical to assume that some degree of an expedited approval might be called for given the way this all kind of played out?

Yes, we would agree with that.

Okay, all right, great. And then on the R&D front, you talked about the right side device and you've talked about it in the past. Any update on timing there or will that also be for later in the year? And then the -- what seems like an up tick in R&D activity related to new products, is that specifically the right side and the pediatric device or in your comments about the update later this year on new products, that implies other enhancements or additions to the product line as well?

Correct, it's across the board. So new enhancements, new products, and so one of the reasons that we're telling you this all now is we've reached the point that some of this information may become more public due to abstracts that we've submitted for upcoming meetings, or physician discussions, or regulatory submissions, or just general planning. And in regards to the Impella RP, our initial experience has been very successful.

We're seeing patients that have extremely high mortality rates and one of the benefits is we're seeing great outcomes, but we're starting to learn that the right side support may also play a bigger role in the left side cardiac output. And I think this is really going to help transform how these patients are treated, and we do believe this product has the ability to save lives, and we're going to be moving forward to get as many patients supported in Europe and in Canada. And then our track record in the US will be to follow the least burdensome approach. We've already spent time and spoken to the FDA about the RP and we have a very active group of physicians and institutions that really want to be part of the initial IDE study. So there is true excitement. I'd encourage all of you as you do your due diligence to look at and talk to people about if there's anything else like the Impella RP. And just one point is that there is no intra-aortic balloon pump for the right side. So this even is more of a unique offering in that the only other alternative for hemodynamic support for these patients is really doing a full sternotomy, putting a tube into the heart, which causes adverse events, and is detrimental in many cases for earlier intervention or recovery.

Okay, great. Thanks. So on timing, we'll find that out when you do the update later this year? I assume maybe -- ?

You will.

Okay, fair enough. Final question, on AMI, looking at the last couple of quarters, kind of the breakdown on procedures you've kind of plateaued if I can use that word, at about the 30% level of overall procedures. That's the indication that I've always thought most doctors I talk to think is really the home run indication here. I'm wondering if to take that next potentially big step up in terms of utilization, if you look at your highest utilization centers, they're the ones that seem to me to have adopted AMI aggressively. Is that going to require, for example, the catalyst from -- I'm going on the expectation that Dr. O'Neil updates his data at TCT this year. Is that going to be the next real bump in AMI usage?

So the AMI patient population is not the PROTECT II. The PROTECT II is the prophylactic application. AMI has actually been bumping up 2% to 3% sequentially each quarter in usage. So it actually did bump again I think 2%. So there's two components of AMI. One is the training. We need to make sure that the sites feel comfortable with the independent use and we're getting better at that, and a quicker setup. And the second is data.

And so the main thing that we think the next catalyst for this type of patient population will be the publication of the USpella, which has been submitted and accepted, we believe. And then the second component of that is the publication on the Impella 5.0 for low output syndrome of post-cardiotomy, cardiogenic shock, which was the FDA study, which has also been accepted for publication. And both of these should be out within the next quarter, which will really drive more data for physicians to review for that emergency application.

Okay, great. Thanks very much. I'll get back in the line.

Your next question comes from the line of David Lewis from Morgan Stanley. Please proceed.

Hi, good morning. It's Steve Beuchaw in for David. Thanks for taking the questions. I wanted to ask about your latest thoughts initially on the outlook for inclusion in the treatment guidelines given that we now have the data and you've had quite a bit of success getting the data in front of a number of physician societies. Could you give us your latest thoughts there?

Sure. Thanks, Steve, for the question. We believe that the PROTECT II, the USpella, the Europella, and the prior publications, which exceeds now over 100 abstracts of publications gives us a real strong position for the guidelines on multiple applications, but we'll continue to publish and complete more studies. And kind of our thought process is really getting the endorsement of the interventional cardiology community, which helps you move forward and have the justification in working with a regulatory agency like CMS.

As you saw last quarter, that went into effect in June, the level of evidence that we have was acceptable for the CMS medical director of New England to give us approval essentially on patients that require hemodynamic support on a broad stroke from prophylactic to emergency applications. What was also public record during that process is that we did receive support from the Society of Interventional Cardiologists, called CAIC, and we're going to continue to work with them on how we can drive education of hemodynamic support in the cath lab.

And then one other new publication that was peer reviewed is kind of almost a paper on novel percutaneous cardiac assist was also published last quarter for those that are interested, in Circulation for the Journal of American Heart Association. The title was Novel Percutaneous Cardiac Assist Devices, the Science of and Indications for Hemodynamic Support, authored by Srihari Naidu. And so this publication just came out and it really is one of the most comprehensive works seen to date on hemodynamic support in the cath lab.

Thanks, that's helpful. Then I wanted to revisit one of the comments you made in your prepared remarks about face time I believe is the word you used during the quarter in front of physicians. Could you go into a little bit more detail about the presence there and how it might have been a little bit different from what we might have expected in terms of level in the quarter, the distraction, if that had an impact on results in the quarter? And if you think there might be any other factors in the quarter that might have caused, by our model, a slight decline sequentially in US commercial revenue?

So as we said, all the applications were up double-digit year-over-year, and as Bob mentioned, the Impella 2.5 was slightly up single digits sequentially. So that part should tell you how the trends are going. Our historical Q4 to Q1 happens this quarter, so we're not on a calendar year, and what we usually see is somewhat of a reduction in revenue. However, based on what I just mentioned on the patients, the patient growth continues to be strong but we do have the once a year meeting where we go for have the team out of the field for a full week to train them. And it just so happened that this quarter we had six medical meetings that we put a major focus on this year, partly because of the PROTECT II data, which in prior years we wouldn't have supported that many shows or done that many user workshops.

So I think that was part of the excitement of the quarter and we do think that we'll see benefits of it this quarter, which is why we would historically forecast or talk about a slower summer quarter because it is -- you do have a reduction in the cath lab, especially in Europe. And what we're talking about is flat to slightly up based on some of this momentum.

Thanks. Just one housekeeping question if I can have one more and it's the growth. Could you give us the growth numbers on PCI AMI shock and then all other indications?

So we broke out as a percentage, but we've also commented that we're not counting all the patients now. What we've said was it was double digit for all three categories with the highest growth rate being on the emergency patients.

Okay, thank you very much.

Your next question comes from the line of Anthony Petrone from Jefferies. Please proceed.

Thanks, gentlemen. Good morning. I may have missed this earlier in the comments. Can you just comment a little bit on gross margin, what the impact was from FX in the quarter, and if you could comment to anything on the early innings for pricing of Impella that would be helpful.

There was a very slight favorable effect on gross margin rates in the quarter versus the prior year. The Euro was 1.44 this year versus 1.49 the prior year. So it was slightly weaker in the quarter. And on pricing, our pricing has been relatively -- I think your second question was on pricing?

That's correct.

It's basically been relatively stable for several quarters.

Okay, just in terms of the moving parts sequentially and gross margin, and in terms of the outlook for the year, the 78% to 80% target seems a little bit like this quarter. I'm wondering what other moving parts were in there this quarter that may have just -- ?

So it was really additional console placements. We placed twice as many consoles this quarter as we did in the prior year and that was the downdraft piece. That's related to the launch of our new automatic Impella console, which we are trying to get out to sites because it allows for quicker setup, better patient monitoring, and automates much of the setup routine.

So this is Mike. Just to be clear on that question, Anthony, we opened up 25 new hospitals, but we are going back to our largest users and approaching them, and retraining them, and placing the new console AIC to help them move onto the next phase of the platform.

Okay, just two follow-ups here. One would be on the cost benefit analysis of Impella. I know you've presented some data around that looking at $3,000 in savings per patient in hospital charges. Just given the environment here, more of a focus seems to be on driving down costs within the hospital. Could you provide an update just on any follow-on data that could come out surrounding the economics of Impella?

And then one follow-up after that would be just anything in the way of local carriers, are you seeing any -- where are you on discussions with additional local carriers? Thanks.

So overall, we're very good and confident in our hospital charges as well as how it relates to reimbursement. So I note two things for the folks on the call. One is an article by the Pinnacle Health System, which I mentioned. It's the Cardiovascular Business Magazine, the April 2011 edition, and I think it really talks about the new model of healthcare, which is specifically looking at a measurement of quality of life as well as costs. And for those that read the AHA publication, if I can quote some of the specifics that we look at, prevention strategy should not be evaluated solely on their ability to reduce cost of care, but instead they should be valued based on the combination of cost and impact on patient well being, including the length and the quality of life. If our ability to prevent and treat heart disease stays where we are right now, costs will triple in 20 years just through demographic changes in the patient population.

So this really talks about the ability and the benefit of our technology to get patients home sooner, reduce readmissions, and then if you recover a heart muscle you are going to maintain a quality of life that doesn't happen if you have to go onto another surgery, or an ICD, or an LVAT, or a transplant. And in fact, we did document in our USpella registry, we are seeing patients that either they're prophylactically being treated for PCI and they're seeing an increase in EF, which takes them out of the guidelines for an ICD. Or we're seeing our emergency patients, after they're treated and they, basically their heart muscle has been maintained, the physicians during the testing determine that they don't need or they're not required to get an ICD.

So these are big things and I think this really speaks to the future of healthcare and it's probably one of the strongest points of our story as it relates to what this innovation can do, not just for quality of life, but also for cost to the system.

That's very helpful.

Your next question comes from the line of Greg Simpson from Wunderlich. Please proceed.

Mike, just a follow-up on Japan. I know you mentioned in the past, but can you give us some context again on the Japanese market as it relates to the opportunity for Impella. I know you've indicated in the past that you consider it the second biggest market opportunity after the US. Can you a little more specific, specifically as it relates to Impella?

Well, Greg, I appreciate the question, but I defer that we'll give more of the specifics of that market at a future event.

Okay, all right. Fair enough. Thanks.

At this time, I'm showing you have no further questions. I would like to now hand the call back over to management for closing remarks.

Great, thank you all for your time today and if there's any follow-up questions or you would like copies or more information on the specific papers that we've mentioned today, please let us know. Have a great day.

Ladies and gentlemen, thank you very much for your participation in today's conference call. You may now disconnect. Have a wonderful day.