Forward Looking Statements
This Report, including the documents incorporated by reference in this Report, includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These forward-looking statements may be accompanied by such words as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "project," "target," "should," "likely," "will" and other words and terms of similar meaning. Each forward-looking statement in this Report is subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statement. Factors that could cause actual results or conditions to differ from those anticipated by these and other forward-looking statements include: the impact of public health threats and epidemics, including the COVID-19 pandemic and resulting or prolonged economic downturns on our operations and financial conditions; effects on our profitability if we are unable to manufacture our products as a result of natural or man-made disasters; fluctuations in foreign currency exchange rates; our dependence on Impella® products for most of our revenues; our ability to successfully compete against our existing or potential competitors; the acceptance of our products by cardiac surgeons and interventional cardiologists, especially those with significant influence over medical device selection and purchasing decisions; the effect of long sales and training cycles associated with expansion into new hospital cardiac centers; the potential for reduced market acceptance of our products and reduced revenue due to lengthy clinician training process; our ability to effectively manage our growth; our ability to anticipate demand for, and successfully commercialize, our products; the impact of unsuccessful clinical trials or procedures relating to products under development; our ability to develop additional and high-quality manufacturing capacity to support continued demand for our products; our dependence on third-party payers to provide reimbursement to our customers of our products; our suppliers' failure to provide the components we require; our reliance on distributors to sell our products in international markets; our success in expanding our direct sales activities into international markets; our ability to sustain profitability at levels achieved in recent years; the unpredictability of fluctuations in our operating results; our ability to develop and commercialize new products or acquire desirable companies, products or technologies; inventory write-downs and other costs due to product quality issues; risks and liabilities associated with acquisitions of other companies or businesses, including our ability to integrate acquired businesses into our operations; the impact of consolidation in the healthcare industry on our prices; our ability to attract and retain key personnel; our ability to obtain governmental and other regulatory approvals and market and sell our products in certain jurisdictions; regulatory or enforcement actions and product liability suits relating to off-label uses of our products; the increased risk of material product liability claims and impact on our reputation and financial results; our ability to maintain compliance with regulatory requirements and continuing regulatory review; the impact of mandatory or voluntary product recalls; material impairments caused by shutdowns of theU.S. federal government; changes in healthcare reimbursement systems in theU.S. and abroad; our ability to comply with healthcare "fraud and abuse" laws and any related penalties for non-compliance; our failure to comply with theU.S. Foreign Corrupt Practices Act and other anti-corruption laws, export control laws, import and customs laws, trade and economic sanctions laws and other laws governing our operations; our or our vendors' ability to achieve and maintain high manufacturing standards; the economic effects of "Brexit" and related impacts to relationships with our existing and future customers; our potential "ownership change" forU.S. federal income tax purposes and our limited utilization of net operating losses from prior tax years; our ability to maintain compliance with, and the impact on us of changes in, tax laws includingU.S. Tax Reform legislation; our ability to comply with, and the impact of any related costs or regulatory actions with respect to, environmental, health and safety requirements; our failure to protect our intellectual property or develop or acquire additional intellectual property; compliance with laws protecting the confidentiality of patient health information; disruptions of critical information systems or material breaches in the security of our systems; risks relating to our shares of common stock, including market price volatility and the potential for dilution to our stockholders' ownership interests through the sale of additional securities; changes in methods, estimates and judgments we use in applying our accounting policies; changes in accounting standards, tax laws and financial reporting requirements; the outcome of ongoing securities class action litigation relating to our public disclosures; and other factors discussed in "Part I, Item 1A. Risk Factors" of our annual report on Form 10-K for the year endedMarch 31, 2021 and the filing subsequently filed with or furnished to theSEC . Readers are cautioned not to place undue reliance on any forward-looking statements contained in this Report, which speak only as of the date of this Report. Any forward-looking statement made in this Report speaks only as of the date hereof. We undertake no obligation to update or revise these forward-looking statements whether as a result of new information, future events or otherwise, unless otherwise required by law. Overview We are a leading provider of medical devices that provide circulatory support and oxygenation. Our products are designed to enable the heart to rest by improving blood flow and/or provide sufficient oxygenation to those in respiratory failure. We develop, manufacture and market proprietary products that are designed to enable the heart to rest, heal and recover by improving blood flow to the coronary arteries and end-organs and/or temporarily assisting the pumping function of the heart. Our products are used in the cardiac catheterization lab, or cath lab, by interventional cardiologists, the electrophysiology lab, the hybrid lab and in the heart surgery suite by cardiac surgeons. A physician may use our devices for patients who are in need of hemodynamic support 27 -------------------------------------------------------------------------------- prophylactically, urgently or emergently before, during or after angioplasty or heart surgery procedures. We believe that heart recovery is the optimal clinical outcome for a patient experiencing heart failure because it enhances the potential for the patient to go home with their own heart, facilitating the restoration of quality of life. In addition, we believe that, for the care of such patients, heart recovery is often the most cost-effective solution for the healthcare system. Our strategic focus and the driver of our revenue growth is the market penetration of our family of Impella® heart pumps. The Impella device portfolio, which includes the Impella 2.5®, Impella CP®, Impella 5.0®, Impella LD®, Impella 5.5® and Impella RP® devices, has supported thousands of patients worldwide. We expect that most of our product and service revenue in the near future will be from our Impella devices. Our Impella 2.5, Impella CP, Impella 5.0, Impella LD, Impella 5.5 and Impella RP devices haveU.S Food and Drug Administration or FDA and CE Mark approval which allows us to market these devices in theU.S. andEuropean Union . We expect to continue to make additional pre-market approval, or PMA supplement submissions for our Impella portfolio of devices for additional indications. Our Impella 2.5, Impella CP and Impella 5.0 devices have regulatory approval from theMinistry of Health, Labor and Welfare , or MHLW, inJapan .
COVID-19 Pandemic
We are subject to additional risks and uncertainties as a result of the ongoing COVID-19 pandemic. The ongoing COVID-19 pandemic has adversely impacted and is likely to further adversely impact our business and markets, including our workforce and the operations of our customers, suppliers, and business partners. While the COVID-19 (including new variants of COVID-19) pandemic remains fluid and continues to evolve differently across various geographies, we believe we are likely to continue to experience variable impacts on its business, including, for example: supply shortages, particularly of our product components; supply chain disruptions, which may limit our ability to manufacture or distribute our products. The depth and extent to which the COVID-19 pandemic may directly or indirectly impact our business, results of operations, financial condition and individual markets is dependent upon various factors, including the spread of additional variants; the availability of vaccinations, personal protective equipment, intensive care unit ("ICU") and operating room capacity, and medical staff; and government interventions to reduce the spread of the virus. During the second quarter of fiscal year 2022, we experienced varying levels of recovery across our product lines and geographic locations from the challenges caused by the pandemic. Despite these improvements, the impact of COVID-19 on our patient utilization volumes is likely to vary widely by country, region, and type. In particular, our Impella product revenue increased in the three and six months endedSeptember 30, 2021 as a result of sales mix and higher patient utilization in theU.S. ,Germany andJapan as compared to the three and six months endedSeptember 30, 2020 , however, in the second quarter of fiscal year 2022, patient utilization of Impella heart pump devices was negatively impacted by an increase in COVID-19 hospitalizations and ongoing shortage of hospital workers that limited ICU capacity which contributed to some deferral of elective procedures. When COVID-19 infection rates spike in a particular region, our patient utilization volumes have generally been negatively impacted as hospitals face capacity limitations, staffing shortages and some in-patient treatments have been deferred. While we believe there may be a backlog of patients in need of medical attention that requires the use of our products, it is difficult to predict when or if those patients may ultimately seek treatment, and therefore, the extent to which COVID-19 may impact patient utilization and, consequently, product revenue. To ensure the health and safety of our global employees, we continue to offer onsite COVID-19 testing and vaccinations in order to maintain a safe working environment. Our proactive testing and vaccination programs have reduced exposure with early detection and enabled our manufacturing facilities to operate at full capacity. We continue to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including any impact on our customers, employees, suppliers, vendors, business partners and distribution channels, as well as on procedures and the demand for our products by keeping apprised of local, regional, and global COVID-19 surges (including new variants of the virus). As of the date of issuance of these financial statements, the extent to which the COVID-19 pandemic may materially adversely affect our financial condition, liquidity or results of operations is uncertain.
Acquisition of preCARDIA
We acquired 100% interest in preCARDIA onMay 28, 2021 . preCARDIA is a developer of a proprietary catheter and controller that will complementAbiomed 's product portfolio to expand options for patients with acute decompensated heart failure ("ADHF"). The preCARDIA system is uniquely designed to rapidly treat ADHF-related volume overload by effectively reducing cardiac filling pressures and promoting decongestion to improve overall cardiac and renal function. We acquired preCARDIA for a purchase price of$115.2 million , with a potential payout of$5 million payable based on achievement of a commercial milestone. The acquisition was accounted for as an asset acquisition as substantially all of the fair value of the acquisition related to the acquired in-process research and development asset. Since the acquired technology platform is pre-commercial and has not reached technical feasibility, the cost of the in-process research and development asset was expensed, resulting in a charge of$115.5 million to the condensed consolidated statements of operations for the six months endedSeptember 30 2021 . In addition, we recognized a gain of$21.0 million related to our previously owned minority interest within the condensed consolidated statements of operations for the six months endedSeptember 30 2021 . 28 --------------------------------------------------------------------------------
Our Existing Products Impella 2.5® The Impella 2.5 device is a percutaneous micro heart pump with an integrated motor and sensors. The device is designed primarily for use by interventional cardiologists to support patients in the cath lab who may require assistance to maintain circulation. The Impella 2.5 heart pump can be quickly inserted via the femoral artery to reach the left ventricle of the heart, where it is directly deployed to draw blood out of the ventricle and deliver it to the circulatory system. This function is intended to reduce ventricular work and provide blood flow to vital organs. The Impella 2.5 heart pump is introduced with normal interventional cardiology procedures and can pump up to 2.5 liters of blood per minute. Our Impella 2.5 device has FDA, CE Mark and MHLW approvals which allows us to market these devices in theU.S. ,European Union andJapan , respectively. We expect to continue to make additional PMA supplement submissions for our Impella portfolio of devices for additional indications. Our Impella 2.5, Impella CP and Impella 5.0 devices have regulatory approval from the MHLW inJapan . The Impella 2.5 device also hasHealth Canada approval which allows us to market the device inCanada . Impella CP® The Impella CP device provides blood flow of approximately one liter more per minute than the Impella 2.5 device and is primarily used by either interventional cardiologists to support patients in the cath lab or by cardiac surgeons in the heart surgery suite. Our Impella CP device has FDA, CE Mark, and MHLW approval which allows us to market this device in theU.S. ,European Union andJapan . We expect to continue to make additional PMA supplement submissions for our Impella portfolio of devices for additional indications of Impella CP in theU.S.
Impella 5.0® and Impella LD®
The Impella 5.0 and Impella LD devices are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite. These devices are designed to support patients who require higher levels of circulatory support as compared to the Impella 2.5 or Impella CP.
Our Impella 5.0 and Impella LD devices have FDA, CE Mark and MHLW approval which allows us to market these devices in theU.S. ,European Union andJapan . We expect to continue to make additional PMA supplement submissions for our Impella portfolio of devices for additional indications. Our Impella 5.0 device also hasHeath Canada approval which allows us to market the device inCanada . We expect to discontinue production and sale of the Impella LD device in fiscal 2022.
Impella 5.5®
The Impella 5.5 device is designed to be a percutaneous micro heart pump with integrated motors and sensors. The Impella 5.5 delivers peak flows of greater than six liters per minute. The Impella 5.5 has a motor housing that is thinner and 45% shorter than the Impella 5.0 and it improves ease of pump insertion through the vasculature. InSeptember 2019 , the Impella 5.5 device received a PMA from the FDA for safety and efficacy in the therapy of cardiogenic shock for up to 14 days in theU.S. The Impella 5.5 pump was introduced in theU.S. through a controlled rollout at hospitals with established heart recovery protocols beginning in fiscal year 2020. The Impella 5.5 device received CE Mark approval inEurope inApril 2018 is being introduced inEurope through a similar controlled rollout. We have submitted an application to the PMDA for the Impella 5.5 device inJapan .
Impella RP®
Impella RP device is a percutaneous catheter-based axial flow pump that is designed to allow greater than four liters of blood flow per minute and is intended to provide the flow and pressure needed to compensate for right side heart failure. Our Impella RP device has FDA and CE Mark approval which allows us to market these devices in theU.S. andEuropean Union . The Impella RP is the first percutaneous single access heart pump designed for right heart support to receive FDA approval. The Impella RP device is approved to provide support of the right heart during times of acute failure for certain patients who have received a left ventricle assist device or have suffered heart failure due to AMI, a failed heart transplant, or following open heart surgery. We expect to continue to make additional PMA supplement submissions for our Impella portfolio of devices for additional indications.
Impella SmartAssist®
The Impella SmartAssist platform includes optical sensor technology for improved pump positioning and the use of algorithms that enable improved native heart assessment during the weaning process. The Impella SmartAssist platform is currently available for 29 --------------------------------------------------------------------------------
our Impella CP, Impella 5.5 and Impella RP heart pumps. The Impella SmartAssist
platform is also approved under CE Mark in the
Impella Connect®
Impella Connect is a cloud-based technology that enables secure, remote viewing of the Automated Impella Controller, or AIC, for physicians and hospital staff. We began a controlled roll-out of Impella Connect at certain hospital sites during fiscal year 2020 and have transitioned most of our customers in theU.S. and continue to introduce this technology to hospitals outside theU.S.
The Breethe OXY-1 System is a portable external respiratory assistance device that we acquired as part of our acquisition of Breethe, inApril 2020 as part of our efforts to expand our product portfolio to support the needs of patients, such as those suffering from cardiogenic shock or respiratory failure, whose lungs can no longer provide sufficient oxygenation. The Breethe OXY-1 System takes venous blood from the patient, removes carbon dioxide and adds oxygen much like a human lung, and returns the oxygenated blood safely back to the patient. InOctober 2020 , the Breethe OXY-1 System received a 510(k) clearance from the FDA for an all-in-one, compact cardiopulmonary bypass system. We will continue to conduct a controlled launch of the Breethe OXY-1 System at a limited number of hospitals in theU.S. Our Product Pipeline Impella ECP™ The Impella ECP device is designed for blood flow of greater than three liters per minute. It is intended to be delivered on a standard sized (9Fr) catheter and will include an expandable inflow in the left ventricle. The Impella ECP device has achieved initial FDA safety milestones, including completion of the first stage in its FDA early feasibility study ("EFS"). The prospective, multi-center, non-randomized EFS is designed to allow us, study investigators, and the FDA to make qualitative assessments about the safety and feasibility of Impella ECP use in high-risk percutaneous coronary intervention ("PCI") patients. In fiscal year 2021, we received approval from the FDA to expand the EFS for the Impella ECP device and we continue to enroll patients in this study. InAugust 2021 , we received Breakthrough Device designation by the FDA for the Impella ECP device, which is provided pursuant to theFDA's Breakthrough Device Program, a program intended to help patients receive more timely access to certain medical technologies by providing a speedier development, assessment and review process for such technologies. Concurrently, we are finalizing the protocol of a single arm pivotal high-risk PCI study for the Impella ECP device as part of an investigational device exemption ("IDE") submission with the FDA. The Impella ECP device is still in development and has not been approved for commercial use or sale. Impella XR Sheath™ The Impella XR Sheath is a low-profile sheath that expands and recoils, allowing for small bore access and closure with certain Impella heart pumps. It inserts at 10 French (Fr) and the flexible, nitinol braids momentarily expand during insertion, then recoil, simplifying access for complex interventions. The Impella XR sheath is intended to produce less trauma at the arterial access site compared to large bore sheaths. InDecember 2020 , the Impella XR Sheath for our Impella 2.5 device received a 510(k) clearance from the FDA. The Impella XR Sheath for our Impella CP device is still in development and has not been cleared for commercial use or sale.
Impella BTR™
The Impella BTR device is designed to be a percutaneous micro heart pump with integrated motors and sensors. The Impella BTR device is designed to be smaller, provide up to one year of hemodynamic support and is expected to allow for greater than five liters of blood flow per minute. The Impella BTR device will also include a wearable driver designed for hospital discharge. The Impella BTR pump is still in development and has not been approved for commercial use or sale.
Critical Accounting Policies and Estimates
Other than the accounting policy changes discussed in "Note 2. Basis of Preparation and Summary of Significant Accounting Policies" to our condensed consolidated financial statements, which is incorporated herein by reference, there have been no significant changes in our critical accounting policies during the three and six months endedSeptember 30, 2021 , as compared to the critical accounting policies disclosed in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year endedMarch 31, 2021 . 30 --------------------------------------------------------------------------------
Results of Operations for the Three and Six Months Ended
The following table sets forth certain condensed consolidated statements of operations data for the periods indicated as a percentage of total revenue:
For the Three Months Ended For the Six Months Ended September 30, September 30, 2021 2020 2021 2020 Revenue 100.0 % 100.0 % 100.0 % 100.0 % Costs and expenses: Cost of revenue 17.7 18.5 17.8 19.9 Research and development 16.5 14.6 15.7 15.2 Selling, general and administrative 41.4 37.7 41.2 39.4 Acquired in-process research and - - 23.1 - development Total costs and expenses 75.6 70.8 97.8 74.5 Operating Income 24.4 29.2 2.2 25.5 Other income and income tax (1.4 ) 0.5 3.8 3.0 provision, net Net income 23.0 % 29.7 % 6.1 % 28.5 % Revenue
The following table disaggregates revenue by products and services:
For the Three Months Ended For the Six Months Ended September 30, September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Product revenue$ 235,785 $ 199,676 $ 477,259 $ 355,093 Service and other revenue 12,357 10,088 23,468 19,521 Total revenue$ 248,142 $ 209,764 $ 500,727 $ 374,614
The following table disaggregates revenue by geographical location:
For the Three Months Ended For the Six Months Ended September 30, September 30, 2021 2020 2021 2020 (in thousands) (in thousands) U.S.$ 200,485 $ 172,147 $ 407,628 $ 306,872 Europe 32,527 25,350 64,764 45,008 Japan 12,267 10,311 23,551 19,296 Rest of world 2,863 1,956 4,784 3,438 Total revenue$ 248,142 $ 209,764 $ 500,727 $ 374,614
Impella product revenue encompasses Impella 2.5, Impella CP, Impella 5.0, Impella LD, Impella 5.5, Impella RP and Impella AIC product sales and related accessories. Service and other revenue represents revenue earned on service maintenance contracts and preventative maintenance calls.
Total Revenue
Total revenue for the three months endedSeptember 30, 2021 increased by$38.3 million , or 18%, to$248.1 million from$209.8 million for the three months endedSeptember 30, 2020 . Total revenue for the six months endedSeptember 30, 2021 increased$126.1 million , or 34% to$500.7 million from$374.6 million for the six months endedSeptember 30, 2020 . The increase in total revenue from the three and six months endedSeptember 30, 2020 to the three and six months endedSeptember 30, 2021 was driven by both Impella product revenue and service and other revenue, as further described below. 31 --------------------------------------------------------------------------------
Impella Product Revenue
Impella product revenue for the three months endedSeptember 30, 2021 increased by$36.1 million , or 18%, to$235.8 million from$199.7 million for the three months endedSeptember 30, 2020 . Impella product revenue for the six months endedSeptember 30, 2021 increased by$122.2 million , or 34%, to$477.3 million from$355.1 million for the six months endedSeptember 30, 2020 . Impella product revenue increased in the three and six months endedSeptember 30, 2021 primarily related to sales mix and higher patient utilization in theU.S. ,Germany andJapan as compared to the three and six months endedSeptember 30, 2020 , as we are experiencing varying levels of recovery across our product lines and geographic locations due to the challenges caused by the COVID-19 pandemic. Despite these improvements, the impact of COVID-19 on our patient utilization volumes is likely to vary widely by country, region, and type. In the second quarter of fiscal year 2022, patient utilization of Impella heart pump devices was negatively impacted by an increase in COVID-19 hospitalizations and ongoing shortage of hospital workers that limited ICU capacity which contributed to some deferral of elective procedures. When COVID-19 infection rates spike in a particular region, our patient utilization volumes have generally been negatively impacted as hospitals face capacity limitations, staffing shortages and some in-patient treatments have been deferred. While we believe there may be a backlog of patients in need of medical attention that requires the use of our products, it is difficult to predict when or if those patients may ultimately seek treatment, and therefore, the extent to which COVID-19 may impact patient utilization and, consequently, product revenue.
Service and Other Revenue
Service and other revenue for the three months endedSeptember 30, 2021 increased by$2.3 million , or 23%, to$12.4 million from$10.1 million for the three months endedSeptember 30, 2020 . Service and other revenue for the six months endedSeptember 30, 2021 increased$4.0 million , or 21%, to$23.5 million from$19.5 million for the six months endedSeptember 30, 2020 . The increase in total service and other revenue from the three and six months endedSeptember 30, 2020 to the three and six months endedSeptember 30, 2021 was primarily due to an increase in preventative maintenance service contracts. We have expanded the number of Impella AIC consoles at many of our existing higher volume customer sites and continue to sell additional consoles to new customer sites. We expect revenue growth for service revenue to be consistent with recent history as most of these higher volume customer sites in theU.S. have service contracts which typically have three-year terms.
Costs and Expenses
Cost of Revenue
Cost of revenue for the three months endedSeptember 30, 2021 increased by$5.2 million , or 13%, to$43.9 million from$38.7 million for the three months endedSeptember 30, 2020 . Gross margin was 82.3% for the three months endedSeptember 30, 2021 and 81.5% for the three months endedSeptember 30, 2020 . Cost of revenue for the six months endedSeptember 30, 2021 increased by$14.4 million , or 19%, to$89.1 million from$74.7 million for the six months endedSeptember 30, 2020 . Gross margin was 82.2% for the six months endedSeptember 30, 2021 and 80.1% for the six months endedSeptember 30, 2020 . The increase in cost of product revenue from the three and six months endedSeptember 30, 2020 to the three and six months endedSeptember 30, 2021 was primarily due to increased production volume and investment in direct labor and overhead as we expanded our manufacturing capacity of our facilities in theU.S. andGermany . The increase in gross margin from the three and six months endedSeptember 30, 2020 to the three and six months endedSeptember 30, 2021 was primarily due to a higher production volume and sales mix primarily associated with our initial launch of Impella 5.5.
We expect that our ongoing investment in manufacturing capacity and the expansion of our Impella CP SmartAssist and Impella Connect platform may decrease gross margin slightly in the near future.
Research and Development Expenses
Research and development expenses for the three months ended
Research and development expense for the six months endedSeptember 30, 2021 increased$21.8 million , or 38% to$78.7 million from$56.9 million for the six months endedSeptember 30, 2020 . The increase in research and development expenses from the three and six months endedSeptember 30, 2020 to the three and six months endedSeptember 30, 2021 is primarily due to our increases in regulatory and quality hiring, ongoing product development initiatives relating to our existing and pipeline products, the development of the Impella ECP™, Breethe OXY-1 System™, Impella XR Sheath™, Impella BTRTM and preCARDIA devices, the expansion of our engineering organization, continued investment in our 32 --------------------------------------------------------------------------------
clinical trials, most notably the STEMI DTU and PROTECT IV studies, and our focus on clinical, technological and quality initiatives for our products.
We expect research and development expenses to continue to increase as we continue to increase engineering, product development and clinical spending related to our initiatives to improve our existing products and develop new technologies and conduct clinical studies. Research and development expenses can fluctuate with project timing.
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended
Selling, general, and administrative expenses for the six months ended
Selling, general and administrative expenses increased from the three and six months endedSeptember 30, 2020 to the three and six months endedSeptember 30, 2021 primarily due to increases in commercial hiring, marketing, clinical training and education initiatives and higher stock compensation expense.
We aim to continue to invest strategically in hiring and sales and marketing activities, with a particular focus on training and education to drive utilization of our Impella devices and recovery awareness for acute heart failure patients.
Operating Income
Operating income for the three months endedSeptember 30, 2021 decreased by$0.9 million , to$60.4 million , compared to$61.3 million operating income for the three months endedSeptember 30, 2020 . Operating margin was 24.4% for the three months endedSeptember 30, 2021 compared to 29.2% for the three months endedSeptember 30, 2020 . The decrease in operating income and margin was primarily due to strategic investments in clinical, engineering, commercial, training and marketing initiatives which increased operating expenses as described above. Operating income for the six months endedSeptember 30, 2021 decreased by$84.2 million , to$11.2 million , compared to$95.4 million operating income for the six months endedSeptember 30, 2020 . Operating margin was 2.2% for the six months endedSeptember 30, 2021 compared to 25.5% for the six months endedSeptember 30, 2020 . The decrease in operating income and margin was primarily due to the preCARDIA acquisition inMay 2021 . The acquisition was accounted for as an asset acquisition as substantially all of the fair value of the acquisition related to the acquired in-process research and development asset. Since the acquired technology platform is pre-commercial and has not reached technical feasibility, the cost of the in-process research and development asset was expensed, resulting in a charge of$115.5 million to the condensed consolidated statements of operations for the six months endedSeptember 30, 2021 .
Other Income
Other income decreased by$4.8 million , to other income of$6.8 million for the three months endedSeptember 30, 2021 , compared to other income of$11.6 million for the three months endedSeptember 30, 2020 . The decrease was primarily due to the recognition of a$4.8 million gain from our investment in Shockwave Medical for the three months endedSeptember 30, 2021 , compared to a$10.8 million gain from our investment in Shockwave Medical for the three months endedSeptember 30, 2020 . Other income, increased by$8.2 million , to other income of$46.8 million for the six months endedSeptember 30, 2021 , compared to other income of$38.6 million for the six months endedSeptember 30, 2020 . This increase was primarily due to a$21.0 million gain related to our previously owned minority interest in preCARDIA recognized upon the acquisition of preCARDIA inMay 2021 and a$22.4 million gain from our investment in Shockwave Medical for the six months endedSeptember 30, 2021 , compared to a$34.7 million gain from our investment in Shockwave Medical for the six months endedSeptember 30, 2020 .
Income Tax Provision
Our income tax provision was$10.3 million and$10.7 million for the three months endedSeptember 30, 2021 and 2020, respectively. Our effective tax rate was 15.3% and 14.7% for the three months endedSeptember 30, 2021 and 2020, respectively. Our income tax provision was$27.5 million and$27.2 million for the six months endedSeptember 30, 2021 and 2020, respectively. Our effective tax rate was 47.5% and 20.3% for the six months endedSeptember 30, 2021 and 2020, respectively. The change in the effective tax rate for the six months endedSeptember 30, 2021 is primarily due to a non-deductible charge for in-process research and development related to the preCARDIA acquisition offset by an increase in excess tax benefits related to share-based compensation. 33 --------------------------------------------------------------------------------
Net Income
Net income for the three months endedSeptember 30, 2021 was$57.0 million , or$1.25 per basic share and$1.24 diluted share, compared to net income of$62.2 million , or$1.38 per basic share and$1.36 per diluted share, for three months endedSeptember 30, 2020 . Net income for the six months endedSeptember 30, 2021 , was$30.4 million , or$0.67 per basic share and$0.66 per diluted share, compared to net income of$106.8 million , or$2.37 per basic share and$2.34 per diluted share for the six months endedSeptember 30, 2020 .
Liquidity and Capital Resources
As of
Following is a summary of our cash flow activities:
For the Six Months Ended September 30, 2021 2020 Net cash provided by operating activities$ 115,931 $ 108,968 Net cash used for investing activities (108,395 ) (81,314 ) Net cash used for financing activities (786 ) (14,711 ) Effect of exchange rate changes on cash 2,422 (3,043 ) Net increase in cash and cash equivalents$ 9,172 $ 9,900
Cash Provided by Operating Activities
For the six months endedSeptember 30, 2021 , cash provided by operating activities consisted of net income of$30.4 million , plus non-cash items of$132.1 million offset by cash used in working capital of$46.6 million . Adjustments for non-cash items consisted primarily of$115.5 million for acquired preCARDIA in-process research and development, a$21.0 million gain related to our previously owned minority interest in preCARDIA recognized upon the acquisition of preCARDIA inMay 2021 , a$22.4 million change in fair value of our investments in Shockwave Medical and other private medical technology companies,$28.4 million of stock-based compensation expense,$13.9 million of depreciation and amortization expense,$8.2 million in deferred tax provision,$6.2 million in inventory and other write-downs, and$1.8 million in accretion on marketable securities. The change in cash from working capital included a$7.4 million decrease in accounts receivable due to timing of collections, a$21.9 million decrease in accounts payable, accrued expenses and other liabilities offset by a$20.3 increase in prepaid expenses and other assets and a$11.7 increase in inventory due to the mix of customer demand and production. For the six months endedSeptember 30, 2020 , cash provided by operating activities consisted of net income of$106.8 million , adjustments for non-cash items of$19.7 million and cash used in working capital of$17.5 million . As discussed above, the change in net income was primarily due to modest increases in Impella revenue, lower selling, general and administrative expenses to reduced discretionary spending and hiring and gains from our investment in Shockwave Medical, partially offset by increases in research and development expenses due to product development and clinical initiatives relating to our existing and pipeline products and lower excess tax benefits. Adjustments for non-cash items consisted primarily of$20.9 million of stock-based compensation expense,$14.2 million in deferred tax provision,$11.1 million of depreciation and amortization expense,$3.1 million in inventory and other write-downs, and$0.5 million in accretion on marketable securities. The change in cash from working capital included a$4.8 million decrease in accounts receivable due to timing of collections, a$6.1 million decrease in inventory due to lower production volumes, a$32.1 million decrease in accounts payable and accrued expenses primarily due to payment of annual bonuses during the quarter endedSeptember 30, 2020 , and a$2.0 million increase in deferred revenue.
Cash Used for Investing Activities
For the six months endedSeptember 30, 2021 , net cash used for investing activities primarily consisted of$82.8 million for our acquisition of preCARDIA,$3.9 million for our investment in private medical technology companies,$7.3 million in purchases of marketable securities (net of sales), and$14.4 million for the purchase of property and equipment primarily related to continued expansion of manufacturing capacity, office space and research development facilities in Danvers and Aachen,Germany . For the six months endedSeptember 30, 2020 , net cash used for investing activities primarily consisted of$74.4 million in purchases from the sale of marketable securities (net of maturities),$52.2 million in net cash for our acquisition of Breethe and$19.6 million used in the purchase of property and equipment primarily related to continued expansion of manufacturing capacity, office space and research development facilities in Danvers and Aachen,Germany . We also made an additional$3.1 million investment in a 34 --------------------------------------------------------------------------------
private medical technology companies. These amounts were partially offset by
Capital expenditures for fiscal year 2022 are estimated to range from$30 million to$40 million to support the long-term development of our business, including manufacturing capacity, building expansions in our Danvers and Aachen facilities and information systems development projects.
Cash Used for Financing Activities
For the six months ended
For the six months endedSeptember 30, 2020 , net cash used for financing activities included$11.3 million for the repurchase of our common stock and$10.9 million in payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards. These amounts were offset by$5.6 million in proceeds from the exercise of stock options and$2.0 million in proceeds from the issuance of stock under the employee stock purchase plan.
Operating Capital Resources and Liquidity Requirements
Our sources of cash liquidity are primarily from existing cash and cash equivalents, marketable securities and cash flows from operations. OnSeptember 30, 2021 , our total cash, cash equivalents, and short and long-term marketable securities totaled$861.5 million , an increase of$13.7 million compared to$847.8 million atMarch 31, 2021 . Marketable securities atSeptember 30, 2021 consisted of$619.7 million held in funds that invest inU.S. Treasury securities, government-backed securities, corporate debt securities and commercial paper. We generated operating cash flows of$115.9 million and$109.0 million for the six months endedSeptember 30, 2021 and 2020, respectively. AtSeptember 30, 2021 , we had no debt outstanding. We believe that our sources of liquidity are sufficient to fund the current requirements of working capital, capital expenditures, and other financial commitments for at least the next twelve months. Our primary liquidity requirements are to fund the following: expansion of our commercial and operational infrastructures; expansion of our manufacturing capacity and office space; the procurement and production of inventory to meet customer demand for our Impella devices; funding of new product and business development initiatives, such as the recent acquisitions of preCARDIA and Breethe; ongoing commercial launch inJapan and expansion into potential new markets; increased clinical spending; legal expenses related to ongoing patent litigation and other legal matters; stock repurchases and payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards and provide for general working capital needs. To date, we have primarily funded our operations through product sales and the sale of equity securities. Our liquidity is influenced by our ability to sell our products in a competitive industry and our customers' ability to pay for our products. Factors that may affect liquidity primarily include our ability to penetrate the market for our products, our ability to maintain or reduce the length of the selling cycle for our products, our capital expenditures, and our ability to collect cash from customers after our products are sold. We continue to review our short-term and long-term cash needs on a regular basis.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements or guarantees of third-party obligations during the periods presented. An "off-balance sheet arrangement" generally entails a transaction, agreement or other contractual arrangement to which an entity unconsolidated with us, is a party under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Contractual Obligations and Commercial Commitments
We have various contractual obligations, which are recorded as liabilities in our condensed consolidated financial statements. Other items are not recognized as liabilities in our condensed consolidated financial statements but are required to be disclosed. There have been no material changes, outside of the ordinary course of business, to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the fiscal year endedMarch 31, 2021 . 35
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