Abiomed, Inc.
Q2 2016 Earnings Call Transcript

Published: 29 Oct 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Abiomed Second Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference is being recorded. I would like to introduce to your host for today's conference, Ms. Ingrid Goldberg, Director of Investor Relations. Ma'am, you may begin.

[Ingrid Goldberg:]

Good morning, and welcome to Abiomed's second quarter of fiscal 2016 earnings conference call. This is Ingrid Goldberg, Director of Investor Relations for Abiomed, and I'm here with Mike Minogue, Abiomed's Chairman, President and Chief Executive Officer; and Mike Tomsicek, Vice President and Chief Financial Officer. The format for today's call will be as follows. First, Mike Minogue will discuss strategic highlights from the second fiscal quarter and then turn to our key operational and strategic objectives. Next, Mike Tomsicek will provide details on the financial results outlined in today's press release. We will then open the call for your questions. Before turning over the call, I would like to remind everyone on this call that this presentation includes forward-looking statements about the development and commercialization of Abiomed's existing and new products, costs associated with product development and commercialization, expected capital expenditures for fiscal 2016, the company's progress towards commercial growth and future financial performance as well as future opportunities and expected submissions to and regulatory approvals from regulatory bodies. Each forward-looking statement contained in this presentation is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these risks and uncertainties appears in the heading Forward-Looking Statements and in the press release we issued this morning in Part 1, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended March 31, 2015, filed with the SEC and available at www.sec.gov and on our website at www.abiomed.com. The forward-looking statements in this presentation speak only to the original date of this presentation and we undertake no obligation to update or revise any of these statements. Thank you for joining us. I'm now pleased to introduce Abiomed's Chairman, President and Chief Executive Officer, Mike Minogue.

[Michael R. Minogue:]

Thank you, Ingrid. Good morning, everyone. Abiomed achieved our best ever quarterly results with revenue of $76.4 million, revenue growth of 47%, and grew Protected PCI U.S. procedures by 70%. As a business we continue to execute on our Protected PCI launch, Impella RP training, expanding the global cVAD Registry, increasing manufacturing capacity, and advancing our regulatory progress in the U.S. and Japan. I want to recognize and thank the employees for their ability to adapt and execute on multiple projects. We have great momentum and our success is based on years of maintaining a focus on improving patient outcomes and building trust with our customers and stakeholders. Our performance over the past four quarters validates Abiomed as one of the fastest growing GAAP profitable medical technology companies. Overall, Abiomed has now grown top line revenue double digits year-over-year for 24 straight quarters. For today's call, we will provide a summary of our Protected PCI launch and briefly comment on our new products. U.S. patient utilization increased 48%, driven by record number of Protected PCI patients. As a reminder, Protected PCI includes elective and urgent high-risk patients and grew 70%. These results confirmed the growing clinical need and new patient population in the cath lab which we estimate at 121,000 potential patients per year. This FDA approval makes Impella the only safe and effective percutaneous circulatory support device for the high-risk PCI indications. Additionally, Emergency Impella support increased to 48% and we believe this potential population represents another 100,000 patients per year. As we've discussed on our last earnings call, Abiomed submitted its FDA PMA supplements for Impella CP and Impella 5.0. As noted at our Investor Day in August, Abiomed estimates that we are treating approximately 5% of the total addressable market of 221,000 U.S. patients. Our 2020 five-year vision baseline model projects in the U.S. only a $1 billion market. This growth rate matches our last five quarters and represents a 22% penetration of the total addressable market. Our major focus in fiscal 2016, as demonstrated at TCT, will be establishing Protected PCI as a new treatment paradigm in heart failure. These patients may benefit from PCI but have poor heart function, complex coronary artery disease and comorbidities that likely require hemodynamic support for complete revascularization in a high risk intervention. Most of this patient population has likely been turned down or not considered for surgery by a heart team because of age or surgical risk factors. The growth for our first half of the year signals the significance of our FDA approval and impact of our clinical education to not only the interventional cardiologist, but to the referring physicians and patients. Over the recent months, Abiomed has had 12 new publications, 124 speaker programs, 11 educational courses, five global events including TCT, and 26 Mobile Learning Lab hospital stops around the country. In addition, this was the first TCT where Abiomed was able to educate our users in the patient identification process. We had five live Protected PCI cases and multiple symposiums, abstracts and course presentations with over 2,000 physicians in attendance. For the first time at TCT, Abiomed highlighted the clinical benefits of Protected PCI, which include a 29% reduction in MACE, a 58% reduction in heart failure classification, and a 52% reduction in repeat procedures. We will continue to focus on training and education as the new standard of care. Also at TCT, we introduced some of our future products to our customers, including Impella ECP, which stands for Expandable Cardiac Power, on a complete 9 French Impella catheter and pump; the Next Generation Impella CP, with an increased flow of 4.5 liters per minute and smart sensor technology; the Impella 5.5, with a smaller profile and designed for months of flow of 5.5 liters per minute and patient ambulation; and finally, the longer term Impella BTR product, which stands for Bridge to Recovery, which is designed to provide up to a year of greater than 5.5 liters of flow, driven by a wearable driver. In summary, we have had an exciting start to fiscal year 2016, with first half revenue growth of 49% and establishment of Protected PCI as a new indication. As evidenced by our patient growth and awareness at TCT, Protected PCI has been validated by physicians that treat higher risk patients requiring percutaneous hemodynamic support in the cath lab. We are confident that in the years ahead, Abiomed will deliver strong growth, support new indications in countries, and launch new best-in-class products. We appreciate the support of our investors and are focused on achieving our goals. As always, Abiomed is committed to meaningfully impacting the lives of our patients and helping our physicians improve outcomes. I will now turn the call over to our CFO, Mike Tomsicek.

[Michael John Tomsicek:]

Thanks, Mike. Good morning, everyone. In addition to the many important accomplishments just mentioned benefiting patients and caregivers, Abiomed has achieved some very impressive financial milestones as well. Fiscal Q2 was another record quarter for revenues and our balance sheet numbers are very encouraging. As noted in this morning's earnings release, second quarter revenue increased 47% to a record $76.4 million. This is the fourth consecutive quarter wherein broad-based patient utilization momentum delivered industry-leading revenue growth. U.S. Impella revenue rose 59% to a record $66.7 million, driven by a 48% increase in patient utilization. We were pleased with this best-in-class year-over-year and sequential growth, especially considering the significant summer slowdown in U.S. cath labs during July and August. Outside the U.S., Impella revenue totaled $5 million on a constant currency basis, this was up 20%. Worldwide revenue – worldwide service revenue of $3.9 million was up 18%. As of the end of the second fiscal quarter, the Impella 2.5 has been placed at 1,000 of approximately 1,400 targeted hospital sites for a penetration rate of 71%. Impella CP has been placed at 739 hospital sites for a penetration ratio of 52% of total hospitals. Our primary focus continues to be increasing usage at existing sites. However, the addition of more 2.5 sites and the introduction of CP 5.0 and RP to existing Impella sites is a platform for future growth. We have a disciplined approach to establishing new Impella programs, focused on training and achieving quality patient outcomes. Reorders continue to be the driving force behind our growth with U.S. reorders at $59.3 million and growing 62% versus prior year, and our reorder rate was 100%. Average Impella 2.5 and Impella CP inventory at hospital sites was 2.82 units per site versus 2.73 in the prior quarter, and 2.6 units in the prior year. So inventory growth is far below the growth in usage. These inventory levels are appropriate, reflecting hospitals' reliance on Abiomed for rapid restocking. But customer inventory levels are expected to grow slowly as utilization increases and new CP 5.0 and RP products are introduced to sites. Gross margin for the quarter came in at 84.1%, reflecting continued strong production volumes and favorable euro exchange rates, but slightly lower product yields than the prior quarter driven by new product and process introductions. R&D expense for the second fiscal quarter totaled $11.6 million and was approximately 15% of revenue. R&D expense includes the submission of the PMA supplements for Impella CP and 5.0, the ongoing Japanese PMDA submission, investment in the global cVAD Registry, and additional expenses associated with the new product development as discussed in our recent Investor Day. These investments could lead to R&D expenses for the third and fourth quarters that are $2 million to $4 million higher than our Q2 rate. And this investment is important in the context of our year 2020 vision. SG&A expense for the second fiscal quarter totaled $39.8 million, up 35% from the prior year. There are a number of investments that will boost SG&A for the balance of the year. Some of these investments are in continuing expansion of our commercial team where 15 heads were added this quarter to a total of 189 professionals. And we have made further investments in marketing and infrastructure. Operating profit for the second fiscal quarter was $12.8 million, or 16.8% of revenue, compared to profit of $4.2 million in the prior year. GAAP net income for the quarter of $7.7 million, or $0.17 per diluted share, compared to income of $3.8 million in the prior year, or $0.09 per diluted share. Although we are recording a GAAP income tax provision at an effective tax rate of 41%, our cash tax payments are negligible due to the application of net operating loss carryforwards from our balance sheet. The company has approximately $70 million additional deferred tax asset value remaining primarily due to NOLs. The balance sheet remains in excellent shape and we ended the quarter with cash and short and long-term marketable securities growing about $19 million to a balance of $176 million. One final note from the quarter, our past, present and future intellectual property and know-how holds an enormous position in the world of percutaneous circulatory support. In the past, Thoratec attempted to invalidate certain Impella patents in Europe and failed. During this quarter, we responded to further challenges and filed our own case in Germany against Thoratec, now St. Jude, for patent infringement. Abiomed had invested over $300 million in research and development on percutaneous high pump technology, and we hold 211 patents and have 223 patents pending. This patent portfolio and our strong financial position make us well prepared to assert our pattern right. Turning to guidance. As noted in our earnings release, we have increased the full year fiscal 2016 revenue guidance and the new range is now $305 million to $315 million, representing growth of 32% to 37% from the prior year. This new range compares to the range noted on our last conference call of $300 million to 310 million, which had been 30% to 35% growth from the prior year. The company is updating its fiscal year guidance of GAAP operating income to a range of 15% to 17%. This new range compares to 14% to 16% previously guided. These margin ranges incorporate the R&D spend level increase previously mentioned. In summary, Q2 was a very strong quarter, demonstrating that we are the standard of care. These results validate our business strategy to-date and enable us to make the disciplined investment needed to help Abiomed achieve our long-term vision. Operator, would you please now open the call for questions.

[Operator:]

Thank you. Our first question comes from the line of Ben Andrew with William Blair. Your line is open.

[Kaila P. Krum:]

Hi, guys. This is Kaila in for Ben. So just understanding that you all don't want to provide longer term guidance, but trying to piece together sort of the big picture commentary at the Analyst Day, which I think implies sort of a 40% annual growth rate over the next several years. And then just pairing it with really strong recent performance, which would suggest that that sort of target is likely achievable. Just benchmarking that commentary against your guidance today, which would suggest a growth rate in the high 30%s, can you just help us understand the disconnect there and if there have been any changes to that long-term viewpoint?

[Michael R. Minogue:]

Kaila, this is Mike. Thank you for the question. Our long-term shareholders have been requesting our long-term vision for several years. And they've been asking for details for our plans to invest around manufacturing, distribution and research. So at our Investor Day, and based on our PMA approval, we wanted to give clarification and give you all visibility to the total addressable market, but also our assumptions of penetration. And what we stated was we believe today, we're getting 5% of the total patient population which we outlined as 221,000 patients. If we grow at the same rate as the past five quarters, not including Q2 this past quarter, that equals $1 billion in U.S. revenue. So that's our baseline goal. And remember, outside the U.S. is $195 million. So let me say that again. The same growth rate we've had from Q1 back is a growth rate of 32%. That's the baseline vision for five years. That's a 32% CAGR. And that represents a 22% penetration and today, we're at 5%, that represents a 22% penetration of the 221,000 potential patients. The top end of that is if we penetrate 40% of the market, that's where we had the range of, in the U.S., $1 billion to $1.6 billion and then if you added the outside U.S., which we didn't give as much visibility to, that's the $195 million, that's the range. So in the U.S., what we're saying is our CAGR growth is anywhere from 32% to 40%, which puts you between $1 billion and $1.6 billion in five years. And that represents going from a 5% penetration rate to a 22% penetration rate and up – max range would be a 40% penetration rate. So, what we thought was important is to give you all the market, our assumptions, and it's not a forecast but it's our goal, and now you can understand why we're investing in manufacturing and distribution and research. And you can do your own modeling based on our penetration rates. All of these assumptions, if we go one level deeper, assumes a 50% penetration rate of the intra-aortic balloon pump. So we think that the balloon pump is an inferior technology but in all our models, we assumed a 50% penetration rate of patients that used to be treated with balloon pumps. And then just one last thing as far as the growth rate over the five years, we've grown double digit for the last six years every quarter. But what we expect the growth to look like is to be a series of inflection points with multiple triggers. So for example Protected PCI is a trigger. The Impella RP rollout when we start expanding more sites will be a trigger point. In emergency, PMA approval on our CP 5.0 and CP 2.5 will be a trigger point. And the Japanese launch will certainly be a trigger point for growth. And then in the long term we have the new products. We have additional geographies and we have new age indications such as the STEMI population which we outlined at the Analyst Day, and none of those projections of revenue are included. There's not anything included in our five-year vision for any of those products or revenue or new indications. Hope that's helpful.

[Kaila P. Krum:]

Yeah. That's perfect. And then I guess just coming out TCT, I mean with all the excitement around Protected PCI, can you just comment, I mean on your level of comfort, I know you had pegged that opportunity at about a 121,000 patients, what inning do you think that we're in with respect to expansion into that patient segment? And just given that excitement, could we potentially see that 121,000 patient estimated opportunity prove conservative?

[Michael R. Minogue:]

Well, there certainly was a lot of excitement. We had five live cases and in any live case, you can have 2,000 to 3,000 people sitting in the audience. All of our symposiums were standing room only. In fact one of them, they had to close the door and they couldn't let anyone else in the room. So there's great excitement. And what's important is that the interventional cardiology community sees this as an opportunity to treat patients that are being turned down for surgery and that can benefit of a complete revascularization because they have ischemic disease. And they do better – for that right patient population, they do feel better and it does reduce their heart failure symptoms and we're able to reduce repeat procedures by 50%. So that's great for multiple parties. Do we think it's conservative? What we've identified, and we laid out also for our investors, so you can plug in your own assumptions, is we're really looking at Class III and Class IV patients that – of that, there are about 2 million, about 68% of coronary artery disease, about 60% of those have low ejection fraction, about 67% of those are between ages of 55 and 80, and then you break it down to, of those, how many have good vessel targets and are not CABG candidates. And then the last is only about 28% are actually diagnosed with an ischemic test. So that's the 121,000 patients, but certainly there's a growing epidemic of heart failure, in many cases due to either the need for revascularization or the need for improvement in muscle function. So we're focused on the 121,000 patients and we are the standard of care. And I do believe what you saw at TCT was that Protected PCI is a new treatment option for heart failure.

[Kaila P. Krum:]

Perfect. Thank you.

[Operator:]

Our next question comes from the line of Raj Denhoy with Jefferies. Your line is now open.

[Raj S. Denhoy:]

Hi, good morning.

[Michael R. Minogue:]

Good morning, Raj.

[Raj S. Denhoy:]

Mike, wonder if I can ask sort of following up on last question, coming out of TCT again, the excitement was pretty palpable around Protected PCI. When we think about the growth the company's experiencing and the growth going forward, what do you view is kind of the gating issues at this point? Is it being able to train and support clinicians as they adopt the technology, or is it something other than that, that perhaps is not – not that you're not growing well, but that could keep growth from accelerating even further?

[Michael R. Minogue:]

Raj, for years we have been saying its training and data. Training and data. And training is ease of use and data is the all the publications to the regulatory approvals. From a execution perspective, the way we look at it is kind of back to the steps or the triggers, the PMA for the 2.5 [Impella 2.5] for Protected PCI is we have to execute and we have the opportunity and we've identified the patient population. The PMA supplements for shock, and again on CP and 5.0 [Impella CP and Impella 5.0], that's – we still expect to have that approved as we stated last quarter sometime this coming summer. The RP [Impella RP] approval, we're doing the initial rollout but we haven't really expanded it. So we're approximately a little over 52 patients into October, and we're making sure those sites are getting good outcomes, and you can be sharing best practices on future training centers, and that will be another execution story and education story. And we have a lot of other items we have to execute on. So that's really the hurdle here is a focus and expanding the Registry, the manufacturing, the marketing. And the result is that we want to have ethical growth. We want the right patients, but we also want to get the best outcomes and make sure that this is seen as a standard of care and a new therapy, because we're looking at this as a 10 year process. And our company I think we've shown that we know how to adapt and execute and as a result, that's why we're one of the fastest growing MedTech companies.

[Raj S. Denhoy:]

When you gave this number of 189 sales people, I think it was, what's the right number, when you think about you've identified 1,400 cath labs as your potential target, how many sales people do you think you need to get to in order to effectively service the market United States?

[Michael R. Minogue:]

Raj, the question on the right number is a function of how many patients we're doing per week and how many patients are done independently. So, we continue to add 5 patients to 10 patients, in fact I think last quarter we added more than that, and we're going to stay on that pace for at least the next four quarters. But it currently feels right, but as this growth is happening, we're adding ahead of the schedule so that we can have that six month window to train them before we get them completely engaged into the process.

[Raj S. Denhoy:]

Okay. Then just lastly, you mentioned the intellectual property litigation in Germany. Is there any more you're willing to provide at this point in terms of what you asserted in that litigation and any particulars around timing?

[Michael R. Minogue:]

I guess, we don't give comments on the specifics of our timing, strategy or tactics with our IP, but just to be clear, these law suits impact St. Jude's ability to commercially sell PHP. And none of these cases will impact our ability to sell Impella. And St. Jude has reported pushing the commercial launch in Europe, I believe, until 2016.

[Raj S. Denhoy:]

Okay. Thank you.

[Operator:]

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

[Unknown Speaker:]

Hi, guys. This is Mike (29

[Michael R. Minogue:]

Morning, Mike (29

[Unknown Speaker:]

First off, obviously, you're seeing strength in a lot places here, but just wondering in terms of the breadth of use, you see anything different in terms of who's using the device, meaning are you seeing a lift in the number of cases at the lower volume centers or is it more increased usage at your high volume centers?

[Michael John Tomsicek:]

I would say looking at the numbers closely through the summer months, there was a little bit greater impact to slowdown at some of the larger centers. So compared to previous quarters, probably more the mid or smaller centers were a larger source of growth than they had been. But as you said at the beginning of your question, all segments of the market continue to grow.

[Unknown Speaker:]

Okay. Great. That's helpful. And then I was wondering if you could give a breakout of the mix between Protected PCI, emergent use and in other.

[Michael John Tomsicek:]

Yeah, so from the earlier section the Mike covered, the – let me just – yeah, I've got it – the prophylactic use of the device was 52%. That's the fastest growing segment now as a result Protected PCI, it grew 70%, and emergent use was 43% of the mix, it grew 48% which is still very healthy. And the remaining 5% is for all other applications.

[Unknown Speaker:]

Okay. Great and then just lastly, can you give us a mix of revenue by devices in the quarter?

[Michael John Tomsicek:]

Right, so as a percentage of revenue, 2.5 was 31% of revenue; CP was 60% of revenue, and the 5.0 was 6% of revenue, with RP at just 3%. CP is the fastest growing, it's growing at 65%, and 2.5 grew at 27%.

[Unknown Speaker:]

Great. Very helpful. Nice job in the quarter, guys.

[Michael John Tomsicek:]

Thanks Mike (32

[Operator:]

Our next question comes from the line of David Lewis with Morgan Stanley. Your line is now open.

[Scott S. Wang:]

Hi, guys this is actually Scott Wang in for David. Mike, just a question on guidance, given kind of both strong placements and utilization, in our model, your guidance range implies that your penetration rate increased quarter-to-quarter sequentially kind of falls into the back half fiscal 2016, which doesn't seem to make sense to me given there's clearly strong demand and underlying momentum. Would you agree that your guidance range looks conservative in its slowing growth outlook or may I missing something?

[Michael John Tomsicek:]

I'm – was a little bit confused about the part of your question where you're talking about the penetration rate into the second half, could you repeat that statement and clarify that?

[Scott S. Wang:]

Sure. So in a model, essentially, we try to track kind of total Impella patients and patient volumes as a – and the utilization rate as a percentage of the addressable market that you laid out at your Analyst Day. And in my mind, it seems like the rate of increase seems to be slower in the back half of the year than it has been in the front half of the year.

[Michael John Tomsicek:]

Okay. When you look back at – as some investors ask us questions about when the inflection started or why the inflection started. There was a steep increase in our growth starting four quarters ago. And the current performance in the last couple quarters had to do with the inflection around protected PCI. And so in the second half of the year, we're a little bit further from that inflection and we're up against some comparables from previous year where some inflection had already started. And in addition to that, we're trying to guide to a level of high – a high level of certainty associated with the sales performance for the rest of our year. And I think that combination of factors is what led to our guidance, so one is really when this inflection started, and the second is just a conservative approach to numbers that we can hit.

[Scott S. Wang:]

That's fair. Thank you. And then, I guess looking back at TCT, obviously, St. Jude, Thoratec came out with some early data on PHP, and I was curious as to what you thought of that early data even though – it was – whether you thought that was interesting despite the fact that we only saw a few patients for PHP.

[Michael R. Minogue:]

So Scott, this is Mike Minogue. St. Jude is a very credible company and has really done a nice job in working with the heart failure community. And we feel their interest in this space essentially has validated the size of the market and the benefits of Protected PCI. For those that attended the presentation of SHIELD I, the primary investigator Ada Polin (35

[Scott S. Wang:]

That's great, Mike. Thank you.

[Michael R. Minogue:]

Thanks, Scott.

[Operator:]

Our next question comes from the line of Jan Wald of Benchmark. Your line is now open.

[Jan D. Wald:]

Good morning, everyone. Congratulations on the quarter. I guess a lot of my questions have been answered but I guess one question would be, you didn't mention Japan at all today or at least much in your opening comments. Any progress on that or anything different to report than we've already heard?

[Michael R. Minogue:]

Relative to our regulatory path, both the U.S. and Japan remain on track with what we stated last quarter. So we expect to have approvals this coming summer on both.

[Jan D. Wald:]

Okay. And I guess you talked about manufacturing and facilities expansion, could you could talk a little bit about what that means in terms of CapEx requirements and how we should understand that spend over the next while?

[Michael John Tomsicek:]

Yeah, I think in – soon, we'll be able to give a little bit more clarity around capital expenditures. I do expect some capital expenditures in the second half of our fiscal year. I'm not prepared to give a forecast yet at this point in time. There's a couple of things that could go either way, but there will be several millions of dollars of investment in manufacturing that'll be necessary to sustain the increase in production that we've had. And when we get further details beyond that, we'll be sure to share it with everyone.

[Jan D. Wald:]

Okay. And I guess my last question is, I've been going to TCT for about 20 years now, and this is – I would say the cases that I saw, especially cases that involve the Impella were some of the toughest cases I have ever seen in those 20 years. How do you think Impella performed in – and especially in the live cases that you saw, do you think those cases would have been able to have been done without the Impella? Well, I guess that's the question.

[Michael R. Minogue:]

Jan, this is Mike. We are not interventional cardiologists and there certainly are different skill levels. But many comments were stated from the panel, which the panel of experts that do high-risk patients, and many comments were made by panel members that they wouldn't attempt – or they wouldn't be able to do this case without hemodynamic support. So we feel like the interventional cardiology community understands that it isn't just a hemodynamic device, it's the ability to do complete revascularization and provide for some hemodynamic (40

[Jan D. Wald:]

Okay. Thank you very much.

[Michael John Tomsicek:]

Thanks, Jan.

[Operator:]

Our next question comes from the line of Shagun Singh with Sterne Agee CRT. (41

[Shagun Singh Chadha:]

Thank you for taking the question and congratulations on the ongoing momentum.

[Unknown Speaker:]

Thank you.

[Shagun Singh Chadha:]

So, I guess I was hoping you can provide some commentary with respect to what we can expect upon CP and 5.0 approval. You mentioned you're already seeing pull-through from the emergent setting but you're not exactly marketing the CP and 5.0 for shock. So I was just wondering, should we anticipate a significant leg up in growth next summer, similar to what we see – or what we saw rather with the 2.4 (41

[Michael R. Minogue:]

Sure and thank you for your question. We were asked that question prior to getting high-risk PCI and we stated that we did believe it would be catalyst, and it has been. Our Impella emergent patient population has already been experiencing strong growth, as you all read and have seen each quarter, so is up this quarter 48%. The Impella CP is a strong driver of that and so we do expect to see a bump in usage with the PMA approval, but because this market's been growing quickly, we don't think it will be as dramatic because it's already in the top tier as a growth driver.

[Shagun Singh Chadha:]

Got it. Thank you. And then you mentioned that TCT was really the first platform where you were able to educate physicians with respect to patient selection. Can you provide more color on where you are in that education process? Are you seeing sicker patients being treated? Just trying to get a sense of who is being treated right now and the pace of adoption.

[Michael R. Minogue:]

So the question, it really gets back to our patient population target. And it starts with this growing epidemic of heart failure in the United States. And again, there's lots of statistics and numbers, and you're talking about 2 million Class III, Class IV patients that have somewhat limited quality of life. And when we narrow it down to the 121,000 potential patients that are actually getting diagnosed for ischemic disease, we're really just scratching the surface with only treating a very small percentage. And again, that's about 5% as well. As much as we have been at the show, there's a lot more physicians that don't attend, and so we're really focused on bringing this training, bringing this education to the communities. And that's why we're doing the Mobile Learning Lab where we pull up to the hospital and the physicians get extra training, but also talk to the community about the benefits of Protected PCI. And for those hospitals, we're essentially bringing the TCT floor, the technology and the slide decks to them and we think it's – it will be very successful in the long term, but we have a long way to go.

[Shagun Singh Chadha:]

Got it. And then if I could just squeeze in one last one. There was a lot of talk about complete revascularization at TCT, and I was just wondering to what degree? Are you seeing that already occur because of Impella? Thank you.

[Michael R. Minogue:]

I think that's the critical question in treating patients, the idea of getting in and out is probably not an appropriate treatment therapy for treating some of the sickest patients in the cath lab. And in the PROTECT II study, in both arms, the patients that had the most extensive revascularization had the lowest adverse event rate. So that also matches what you're seeing clinically around in the other clinical studies, such as SYNTAX or, in general, PCI studies that the most complete revascularization does tend to yield the best outcomes. And that's been one of the benefits of CABG over the years, because under a surgical procedure, you do get complete revascularization and, to our knowledge, the PROTECT II study is the only FDA study that has ever shown an improvement in ejection fraction for PCI. PCI historically has had symptom relief, but what's very exciting is to see the improvement and the quality of life, to see the improvement of more than 50% reduction in heart classification, and we're really excited for what that means for the patient.

[Shagun Singh Chadha:]

Thank you very much.

[Operator:]

At this time, I'm showing no further questions. I would now like to turn the call back over to Michael Minogue for closing remarks.

[Michael R. Minogue:]

We just want to say thank you to our investors and your support all these years. We have a lot more work to do but we're very focused and if there's any follow-up questions, please feel free to call in. Have a great day.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.