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Abiomed Inc (NASDAQ:ABMD)
Q1 2020 Earnings Call
Aug 1, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Q1 2020 Abiomed Earnings Conference Call.[Operator Instructions]. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions].I would now like to introduce your host for today's conference, Ms. Ingrid Goldberg, Director of Investor Relations. Ma'am, you may begin.

Ingrid Goldberg Ward -- Director, Investor Relations

Thank you. Good morning, and welcome to Abiomed's first quarter of fiscal 2020 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 Todd Trapp, Vice President and Chief Financial Officer. The format for today's call will be as follows. First Mike Minogue will discuss the first quarter business and operational highlights and then Todd Trapp will review our financial review our financial results, which are outlined in today's press release. After that, we'll open the call to your questions.

Before we begin, I would like to remind everyone that our presentation today includes forward-looking statements as it relates to discussion of our outlook. The Company cautions investors that any forward-looking statements involve risks and uncertainties that are not guaranteed in the future. Actual results may differ materially from those expressed or implied in forward-looking statements due to variety of factors. These factors are described under the forward-looking statements in our earnings press release and our most recent 10-K and 10-Q filed with the SEC. We do not undertake any obligation to update forward-looking statements.

With that, let me turn our call to Abiomed's Chairman, President and Chief Executive Officer, Mike Minogue.

Michael R. Minogue -- Chairman, President and CEO

Thanks, Ingrid. Good morning, everyone. As we communicated in the last earnings call, we knew that we had some US headwinds to address in Q1 following a poor performance in March due to external noise and a distraction in our internal focus. We acknowledge that the first half of fiscal '20 was going to be more challenging, in part due to confusion on the Impella RP letter, tougher comps at 30% growth from prior year and the normal cath lab summer slowdown.

In Q1, we implemented new training programs, organizational changes in distributions, and launched external initiatives that will require time to drive more growth in the future. Therefore, our outlook for the fiscal year has been adjusted accordingly.

In the first quarter, Abiomed delivered $208 million of revenue, up 15% year-over-year. Operating margin for the quarter was 29.2%. Outside of the US, we continue to see strong performance with European revenue at 28% on a constant currency basis and Japan revenue of $8.5 million, up 227% year-over-year.

We are confident in our ultimate global adoption because we know our innovation improves clinical outcomes and patient quality of life. Abiomed is creating the field of heart recovery and this proven clinical value will ultimately transform the standard of care despite a few challenges along the way. Therefore, we continue to believe Impella adoption is a function of training, data and time. Over the last five years the Impella product platform has been one of the fastest growing technologies in the medical device field.

For today's call, I will cover two topics. First, I will provide an update on internal changes we've made in Q1; and second, I will discuss our progress on external initiatives. So first on the internal changes, we have adjusted our US strategy and distribution model in order to go wider into the community hospitals and deeper into existing sites by expanding the number of physicians with specialized training and education.

In the Q4 call, we announced the creation of more US regions, increasing territories and account managers. This will reduce the span of control and enable our field team to target distribution into areas with lower penetration, spending less time in the car and more time at hospital sites. We feel this will help create more robust Impella programs, expand users at existing sites and leverage our hub-and-spoke network into the community. This is where inotropes and intra-aortic balloon pumps continue to be first line of therapy despite the evidence that they are harmful and predictions of mortality when used before Impella.

Additionally, we've expanded our education and training on Impella access, closure and ICU management for the next wave of physician users, which is our biggest obstacle in this group. To address this, we have hosted additional training courses and created new educational content for physicians, which I will highlight later. We also simultaneously launched our SmartAssist platform for the fiscal year, which we believe will make our team more productive, improve ease of use in the ICU and help expand patient utilization.

Now, I'll transition to our external initiatives. We successfully closed out the Impella RP physician letter with the FDA. The updated FDA letter on the Impella RP was issued to healthcare providers on May 21st, validating that the Impella RP heart pump is safe and effective for treatment of right heart failure. The FDA also identified a new category of salvage patients that have been in cardiogenic shock for more than 48 hours or 2 days due to right heart failure and acknowledged salvage patients will have lower survival rates.

Impella RP remains the most studied right-side device and is the only right-side heart pump technology with FDA PMA approval. We welcome and acknowledge that this FDA approval requires a higher standard of data collection and transparency than other off-label products. We are continuing to expel remaining confusion on the Impella platform, and note that this will take time. In Q1, Impella RP grew 18% year-over-year and was down 20% sequentially. We opened 23 US sites compared to 50 sites in the prior year, lowering overall revenue by $1.3 million.

Now for the most important and positive update for the quarter; in May, at the 2019 Society for Cardiovascular Angiography & Interventions Conference or SCAI, the latest national cardiogenic shock initiative or NCSI clinical data was presented and simultaneously published in Catheterization and Cardiovascular Intervention, CCI.

The clinical data from NCSI investigators was presented during late-breaking scientific sessions by Dr. Bill O'Neill and was followed by further in-depth presentation and discussion at our Abiomed sponsored session. A link to the NCSI presentation is included in our press release.

Similar to all prior-year cardiogenic shock studies, the data prospectively revealed that in placing the Impella heart pump pre-PCI, 171 consecutive AMI cardiogenic shock patients from 35 sites demonstrated 72% survival with 98% native heart recovery at discharge. As a reminder, this compares to the 50% mortality rate that cardiogenic shock patients have experienced for the last 20 years without Impella. This study yet again demonstrates that a protocol-based approach to increasing survival rates in cardiogenic shock is reproducible in academic and community hospitals across the US.

I would like to share a recent patient story. Last January, Soma Ambadapudi, 49-years-old, began experiencing severe chest pain while running the Houston Half Marathon with his daughter. Mid-race, Soma collapsed and the EMTS were called. He was in cardiogenic shock. Soma received CPR and was shocked several times on the way to Memorial Hermann Texas Medical Center.

At this point, Dr Prakash Balan immediately placed the Impella CP before stenting Soma's 99% blocked LAD artery. After 5 days of Impella support and unloading therapy, the Impella was removed. Today, 7 months later, Soma's heart function has returned to normal with an EF of 55%. He is back at work and living an active life with his family. He and UnitedHealthcare, his private insurance, will now not spend over $1 million in future hospital charges by avoiding the cascade of the most invasive and expensive treatments that would have continued for the duration of his life had his heart not recovered.

Also at the SCAI meeting four of the six PCI live cases incorporated Impella support and successfully demonstrated the new SmartAssist features, including peak flows above 4 liters per minute and metrics on the console to assist in weaning the patient post procedure.

In order to address a primary obstacle for growth, we held one of our largest events on Impella insertion access and closure at SCAI with more than 120 physicians in attendance. Simultaneously, SCAI released and highlighted an interactive physician-initiated access and closure online training manual with videos to simplify techniques and best practices. This online tool exists on the SCAI website where it has been well received by the clinical community and has already surpassed 7,500 hits and downloads. We recognize that access and closure remains a key area of focus, and we are taking action to train away these concerns.

In the future, we will also innovate to minimize this concern with our expandable 10-French sheath for Impella CP and our new product, the Impella ECP 9-French pump. At SCAI, presentations were also given by physician experts on the STEMI DTU study, the INOVA-SHOCK protocol and potential for reduction of acute of acute kidney injury or AKI, with Impella used during high-risk PCI.

Today, we are announcing a CVAD Study publication in Catheterization and Cardiovascular Interventions on Impella's reduction of AKI, validating previous publications which you will find summarized in our quarterly slides. The paper evaluates 223 consecutive patients from our CVAD Study and demonstrates a 78% lower AKI rate relative to the expected rate in this patient population. Specifically, AKI rates in these Impella patients were 4.9% compared to the 21.9% predicted rate. It is exciting to see new data around the potential for Impella to reduce the risk of AKI, which remains a critical problem for heart failure patients undergoing PCI, TAVR and CABG. Patients with AKI are estimated to have a 10% in-hospital mortality. And if escalation to dialysis is required, the in-hospital mortality increases threefold to 34%.

In conclusion, we are confident in our technology, people and our ability to improve outcomes. Today, there is no other product like Impella and no other FDA approvals for this patient population. As a company, we remain financially prudent and profitable with $527 million in cash, no debt and an IP platform that now encompasses over 700 patents with nearly 600 pending. We believe that Impella adoption is a function of training, data and time, and we remain dedicated to our mission and improving the standard of care.

I want to thank our investors for their support over the years. I also want to recognize our customers and employees for creating the field of heart recovery. I will now turn the call over to our CFO.

Todd A. Trapp -- Vice President and CFO

Thanks, Mike, and good morning, everyone. In the first quarter, we delivered revenue of $208 million, an increase of 15% on a reported basis, versus a tough comparison of 36% growth in Q1 of last year. By region, US revenue grew 11% to $175 million, driven by a 13% increase in patient utilization. Outside the US, revenue was $32 million, up 50% on a constant currency, driven by strength in both Europe and Japan.

In the US, at the end of our fiscal Q1, the Impella 2.5 has been placed at 1,237 sites and Impella CP is at 1,387 sites. The Impella 5.0 is now in 605 sites and the RP is in 469 sites out of the potential 1,000 plus heart hospitals. We opened up fewer sites in Q1 than historically, as we prioritized patient utilization and physician training at our existing sites.

Reorder performance in the quarter was solid, with the rate slightly above a 100%, consistent with Q4. Average combined inventory at the hospitals for the Impella 2.5 and CP was 4.4 units per site, again consistent with the inventory levels we saw last quarter.

We highlighted on our last call that March was a soft month for Impella utilization, specifically for high-risk PCI. And we mentioned that the April patient growth rate showed improvement over March. US patient growth in April was 17%. However, we were not able to sustain this rate of growth in the summer slowdown in June.

Outside of the US, we are seeing continued growth in Impella adoption. In Q1, our European revenue increased 28% in local currency due to higher patient utilization in Germany and further adoption in other countries like Switzerland, Austria, France and Italy. We saw solid high-risk PCI growth in Germany, up 35%, likely fueled by a publication in the Journal of Interventional Cardiology by Dr. Burzotta from Italy.

Of -- 86 complex high-risk patients who received an Impella supported Protected PCI. The study found that six months after Protected PCI, the number of patients with left ventricular injection fraction greater than or equal to 35% increased by 205% from 22% to 67% of the patients, consistent with our findings in PROTECT II. Additionally, the controlled roll-out in Japan continues to gain traction as we generated $8.5 million of sales in the quarter due to patient utilization in new sites.

In Q1, we opened 22 sites and are now in 82 hospitals with 126 approved by the government. We successfully treated our first Japanese patient with our limited roll-out of the Impella CP, and we expect to begin the product launch in the second half of fiscal year. We also received PMDA approval for Impella Connect and look forward to bringing this new technology to Japan.

Moving forward, gross margin was 82.1% in the quarter compared to 82.9% in the prior year. The year-over-year variance was driven by SmartAssist launch and geographical sales mix. In the quarter, R&D expense totaled $24 million, an increase of 12% from the prior year, driven by investment in new product development. This includes the Impella 5.5, which is CE marked and in a limited market release in Germany; our expandable sheath, which had a positive first-in-man clinical experience in 15 patients outside the US; and our ongoing work around Impella ECP, a low profile, expandable 9-French pump. These ongoing investments should result in sustainable growth rates in the future.

SG&A expense for the quarter totaled $86 million, 6% higher versus prior year. The increase was due to the investment in our global commercial team and training. We also had lower incentive comp in the quarter as compared to last year. In Q1, operating income grew 30% to $61 million, translating to an operating margin of 29.2%. Margins expanded 320 basis points due to higher volume, lower incentive compensation and timing on R&D project spend, with some shifting into Q2.

GAAP net income for the quarter was $89 million or $1.93 per diluted share versus $1.95 in Q1 of '19. Net income decreased 1%, driven by our tax rate, which was positively impacted last year due to excess tax benefits associated with our equity compensation. We also booked a $40 million pre-tax gain in the quarter for our investment in Shockwave. Excluding the impact of excess tax benefits and the Shockwave gain, EPS grew 28% year-over-year.

In the first quarter, we generated $65 million of operating cash flow, an increase of 39% versus prior year. As you know, Q1 is typically a slower quarter on cash due to our seasonality and incentive compensation payouts. Our balance sheet remains debt free, and we ended the quarter with $527 million of cash in marketable securities.

Today, we also announced a 200 million share buyback program. This new program is a result of our proven ability to generate strong, consistent operating cash flow in our conviction of Abiomed's long-term outlook. The share buyback program is in addition to our ongoing practice of using cash to cover withholding taxes on vested employee-restricted share units, of which we spent over $100 million in the last 18 months. With that said, our number one deployment priority continues to be investment and our internal growth programs and distribution, which we believe will generate high returns for the shareholders over time.

Before turning to guide -- before turning to our update on full-year guidance, I'd like to remind investors of the seasonality of our fiscal year. Q2 is typically a slow quarter for cardiovascular devices due to the summertime slowdown in the cath lab and physician vacations. As a result, and like years prior, we expect Q2 revenue to be slightly down versus Q1. Given our performance in the first quarter and what we have forecasted in Q2, we are revising our revenue guidance and now expect to be in the range of 15% to 20% for the fiscal year. We also expect operating margins to be in the range of 28% to 30% for the year.

As Mike mentioned, we made progress on our actions that were discussed in the last earnings call, but understand that it will take some time to make the adjustments that we feel will better the -- position the Company for the company for the longer term.

So in summary, we remain confident in our investment thesis. With new products, new indications and new countries on the horizon, we believe we have a path to long-term, sustainable growth. Coupled with our strong profitability and robust balance sheet, Abiomed is well positioned for the future.

Operator, please now open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions]. And our first question comes from Danielle Antalffy from SVB Leerink. Your line is open.

Margaret Kaczor -- William Blair -- Analyst

Good morning, everyone. Thanks so much for taking the question. Mike, I just wanted to touch on whether this could -- so I appreciate that some of this is execution. But it feels like maybe given the time that it's taking to drive a recovery we're at a different phase of the adoption curve, a little more push versus pool. And I'm wondering if, A, you would characterize it like that; and then secondarily, what does that mean for the sustainable growth rate going forward. Do you feel confident that the internal initiatives and external initiatives that you talked about are going to allow you to realize the full value of the team [Phonetic] here? Thank you so much.

Michael R. Minogue -- Chairman, President and CEO

Thanks, Danielle, for the question. The -- we are at different phase. So where I would characterize is, we are now moving our way through the early majority. And so, if you look at the numbers, 85% of our patients come from 50% of our accounts and those accounts are driven by the physicians.

So, the other half of our installed base are not utilizing Impella the way they could with the best practices. It also means that because they're using inotropes and intra-aortic balloons, they're getting outcomes in shock and other areas that have been consistently in the 50% survival range. The big concern that we have with this next phase of physicians, whether they're at existing centers that we're already at or as we go into the community, is access and closure. So, you're seeing an intense focus now on the access, meaning putting Impella in and then closing the 14-French hole.

And so, we're doing that with education. In the PROTECT II study, we have data showing vascular complications were numerically the same between Impella and the balloon. We're doing it with clinical workshops and hands-ons events like we did at SCAI. And probably the most important educational tool we have now that's been validated and is on the SCAI website is our Access Closure manual with videos. It was a physician initiated educational program. And again, it is now on line and it was presented and it's utilized by the SCAI Society, which is the interventional cardiology group.

So, that phase that we're at is exactly -- they have a bit of a different learning curve. And as we're going back out into the communities, we've shown that if folks follow the NCSI protocol -- which several of those hospitals are in the community, they can also duplicate those outstanding outcome. So, that's what we're focused on. And again, if I put it into the formula and training data and time, the access closure is really the big concern you'll find as you do your surveys.

Now, when we get into the ICU, that has to do a little bit with the patient management and we believe SmartAssist is a big key for that because it allows us to have information right on the console, know where the pump is. And then if alarms go off, people have support on site, on call, and at our Impella Connect centers, it's real-time being monitored.

For the data component, I also think we've had a recent batch of incredibly positive papers, maybe so much that they're getting watered down because they're all coming together. But the first is the SCAI paper. I mean this is a drastic change in survival compared to the historic norms of 50%, and again 98% have recovery. That's cost effective as well as it's what the patient wants.

The INOVA publication again showed a different unit, a different hospital system that followed their own protocols, but again utilizing Impella early. They were also able to move survival from 44% to 82%. The Burzotta paper, which is actually -- likely one of the reasons we're seeing an increase in high-risk PCI in Europe. Again, it shows what PROTECT II or FDA studies showed, that when you do a complete revascularization these patients see a permanent improvement in their EF. And then, as of today announcing from our cVAD Study, that's prospective and it's where we also do our FDA post-approval studies that were able to minimize the rate of AKI. So all those things together, the training and the data, and as we've mentioned today it will require a little more time to get to that next phase of users.

Margaret Kaczor -- William Blair -- Analyst

Thank you so much.

Operator

Thank you. Our next question comes from Chris Pasquale from Guggenheim. Your line is open.

Chris Pasquale -- Guggenheim -- Analyst

Thanks. Todd mentioned that the early momentum you saw in April really wasn't sustained over the course of the quarter. It sounded like you were attributing that seasonal weakness, but that would have been true in the year-ago period as well. So I'm curious at this point what drives your confidence that the RP letter is still the best explanation for the slowdown we saw in March. And if so, then why haven't just the passage of time and the updated communication driven a more immediate rebound?

Todd A. Trapp -- Vice President and CFO

So Chris, it is accurate and -- that the seasonal issue is true in both cases. However, the amount of organizational change and some of the external noise that was out there makes it more difficult to update folks and to drive that benefit that we did see in April.

The second part of your question is the confidence we have and the RP effect, is that the RP letter did come out. Unfortunately, the process of physician letters from the FDA is they still come out with the same headline. And it wasn't until the very end of the of the update that it talked about the safe and effective and closed it out. So even in the update that went out, there was a little bit of confusion on how it hits the web and there was a few media sources that again misinterpreted it.

The second thing is that there is a lot of the initial noise, it doesn't necessarily get clarified. So we are making progress. That's why the SCAI meeting was very important for us to have all that information there, and we did talk about it. I also think that some of these things require just a consistent period of time before people understand the context of what is a salvage patient and why are protocols so important.

So we'll continue to do that, but again we said the RP letter was the biggest driver of the external noise. There is other noise that's happening around us, that thing is to do with either staging or administrative changes or just perception that's out there on the product. And so, we continue to work through those as well by proving the product and also getting out the information on the clinical data.

Chris Pasquale -- Guggenheim -- Analyst

And Mike, the distribution changes that you've made, are those now in place or is that a work in progress?

Michael R. Minogue -- Chairman, President and CEO

It's both. So we -- because we're expanding management roles and because we're adding more heads, we haven't been able to fill all of those yet. But from the infrastructure and from this strategy, we know that when we go into these community hospitals that are somewhat large, there is tremendous upside because they again tend to be the biggest users of our inotropes and balloon pumps. So, we can customize the distribution in those markets.

And then from a strategy perspective, we really want to incorporate the hub-and-spoke broader, so that those sites that will set up their own systems of care have the option to transfer those patients, especially centers that do the expertise of the ICU management and biventricular support.

Even at existing sites, we have to get deeper so that we always have the physicians on call and we have the heart team approach. So for that, we're going to specialize training now around program. So whether it's a high risk Protected PCI program or whether it's a shock protocol, we're going to have to come out a little bit different for places that the physicians may have essentially required more handholding or have just a bigger concern about access and closure. And I think as you all survey users -- probably the number one thing you'll hear from folks that if they're not using it is they're still just concerned with access closure.

What we also remind people is with the right training and what we have, the catheter, French-14 at the -- French at the head, but the catheter itself is 9 French. So if we look at the STEMI DTU study in the 50 patients, we only had two that had vascular complications and both of those were at X-Plan [Phonetic], which is again a heart attack patient and we probably shouldn't have issues that X-Plan is the patients more stable. So those are things we're going to do with education, but we definitely have hit a next wave of users that really are concerned about access and closure.

Chris Pasquale -- Guggenheim -- Analyst

Thanks.

Operator

Thank you. Our next question comes from Margaret Kaczor from William Blair. Your line is open.

Margaret Kaczor -- William Blair -- Analyst

Hey, good morning folks. Thanks for taking the questions. First one First one from me, maybe it's just walking through kind of this new wider sales strategy focus on community hospitals versus going deeper into existing accounts at -- and just wanted to pick away at that in terms of how much of this was always in the plan even last quarter? Maybe how should we assume for new site add sort of trend throughout this year, really how quickly can you get some of these new sites to ramp?

Michael R. Minogue -- Chairman, President and CEO

So Margaret, the -- 100 of the top US heart hospitals in the country, I think 99 have Impella, it might even be a 100 now. So, we've done well at the hubs. For the most part, the hubs still have upside because we have escalation of patients. We have more patients that are not getting high-risk PCI and then we have the community hospitals, our spokes. And so I think the evolution, if you look at the number I provided on, 85% of the patients coming from 50%, that means the other 50% are actually not utilizing the technology even though they have the same type of clinical challenges for high-risk PCI and for shock.

We have best practice protocols. We have techniques and publications showing that you can get better outcomes for high-risk PCI and for cardiogenic shock. So, there is no reason now that centers -- that the other 50% should not be utilizing Impella. And there is also extensive clinical data on inotropes and intra-aortic balloon pumps documenting that they -- that they're in some cases harmful and when used before Impella are statistical predictor of death.

So, we have to now evolve a little bit more so that when we go into the community hospitals, we really focus on the Access Closure training. We also give them the support they need on-site. We give them the support in the ICU. And as we set up the network, a hub-and-spoke, if they have a patient that is too complicated or requires biventricular support, they feel comfortable and they have the option to then transfer that patient to the hub, to the center.

And so, I think we've evolved where we've done pretty well with the hubs. We're now moving to Phase II to get that next wave of the late majority and they're really -- those physicians are out in the community, at those hospitals and we need to do a better job there.

Margaret Kaczor -- William Blair -- Analyst

Okay. And then just as a follow-up, maybe guidance, if we kind of take Todd's comments next quarter will be maybe down seasonally just a bit, and apply that into the model for this quarter, it essentially starts to imply kind of this 14% growth for the rest of the year I think for the US. Incorrect me if math is wrong on that. But how much of that is really going to be driven by comps getting easier going into the fourth quarter and some of these initiatives really taking off in the fourth quarter relative to same steady progression throughout the year? Thanks.

Michael R. Minogue -- Chairman, President and CEO

So, Margaret, we're giving you full transparency of the numbers, that's why we've provided April last quarter's call and given you the details this quarter. We obviously feel comfortable about what we're seeing outside the US, and Japan is obviously a great opportunity for us to have sustainable growth for many years. The reason we're so focused on that next phase in the US is because we expect to get back a reacceleration of growth in the future. We do see a little bit of adjustment for this fiscal year. But with the training that we're doing, with the new clinical data, we expect to return to stronger growth with some of these new products, new indications, existing education. And then obviously, we've got the Rest of the World, the new geographies outside of the US, Germany and Japan longer term.

So you -- will give transparency and you'll see what we're doing each quarter along the way. But right now, what we're really focused on is improving outcomes. And remember that the way you become a standard of care, the way you drive true adoption, is you just have to continue to improve outcomes for patients and make it cost effective. And the one thing on this call and the one thing of all these new publications is they consistently reiterate that we're able to get better outcomes for patients utilizing the Impella technology.

Margaret Kaczor -- William Blair -- Analyst

Great, thanks.

Operator

Thank you. Our next question comes from Raj Denhoy from Jefferies. Your line is open.

Raj Denhoy -- Jefferies -- Analyst

Hi, good morning. Maybe Mike, I can ask you, I think one of the things that's a bit troubling about the slowdown that you're in right now is that when one thinks about the market sizes we've always assumed for Impella, 200,000 plus in the United States alone. You're still less than 15% penetrated in that. So, I guess what -- the question is really what gives you the confidence that the things you've identified, whether it's expanding the sales force, there's some -- issue with access and closure are truly the push-backs right. Is there any other issues that maybe you're contemplating that might be behind the slowdown that potentially could be protracted here an extent even longer than maybe we're assuming?

Michael R. Minogue -- Chairman, President and CEO

So Raj, that's a good question and something we obviously have analyzed. So the first point I'd say is, up until March Impella has been one of the fastest growing medical device products for about 5 years. So, that's a signal that the market is there.

Number two is, we still have exclusively the FDA labels for high-risk PCI and shock. So, we're safe and effective and CMS says we're reasonable and necessary. And so, those are things that come first before you get the mass production and that becomes a standard of care. And then as I travel around the field, unfortunately I see a lot of centers where they are not utilizing the Impella technology or following best practices, or physicians are either turning down these patients completely or trying to get in and out. And the numbers show that.

So as you look at what's the number one killer in the US, it's coronary artery disease. And the numbers are huge, and when you talk to physicians or even you look at your market sizes, there is a lot of great technology out there impacting the plumbing or the electricity or the valves. But in the end, coronary disease is your -- it means that you have to treat the coronary arteries. And there is 15 million people in the US just alone with it. It causes 900,000 deaths. The Advisory Board put out a stat that high-risk procedures are projected to grow 47% over the next 25 years. This is the only area of growth for PCI.

And remember that you die of organ failure, which means the pump stops, and so that's why this is the highest mortality patient population. It's also why these patients are turned down treatment in the cath lab and surgical suite. So while we go through this phase, it's also important remember the level of growth we've had, the complexity of these patients and how sick they are. And what we've put out is our current addressable market, not the total addressable but the current addressable market, because we know that there is 700,000 people in the US that have Class III, Class IV with coronary disease. Many of those are also at risk of AKI.

And so, we've narrowed it down to the 121 for high-risk PCI on a label that we exclusively have. High-risk PCI in itself is a first-of-its-kind indication for Impella and that there is additional data showing 300,000 plus patients have the ischemia and are undiagnosed. And then, of the 100,000 shock patients, these are patients that are already in the hospital today. And unfortunately, there is still probably 40 ,000, 50,000 intra-aortic balloon pumps getting used in the US and there's over 100,000 patients getting inotropes every year in the US, so that unfortunately this is still a clinical crisis and one of the biggest problems at hospitals.

And if you even look at the latest study from Europe on just shock, Culprit, the recent one showed that they had 50% survival in shock without Impella used upfront where they just didn't do anything until after patients had already had lactates above 18 and were in profound shock.

So, we do feel confident. The numbers in the US and the numbers outside the US are incredibly conservative. And again, unfortunately you do see that high-risk PCI unless you get complete revamped [Phonetic] has poor outcomes. And for shock, unless you have a strategy to not only increase survival and drive for heart recovery, those patients have poor outcomes.

Raj Denhoy -- Jefferies -- Analyst

No, that's helpful. Maybe I could ask kind of a -- bit of a follow-up, but maybe for Todd. When you think about the new guidance of 15% to 20% for the year, how should we think about the second, third and fourth quarters? I mean are you going to be toward the low end of that and then accelerate as you move through the year or just really how should we even think about this current quarter, the second quarter?

Todd A. Trapp -- Vice President and CFO

Yes, well, thanks, Raj. I said in my opening remarks that typically Q2 is slightly down from Q1, so you can do the math kind of the year-over-year growth rate there. And then we do expect to see growth pickup up in the second -- of the year. Part of it is because we have easier comps. As you call recall, last year second half grew a lot less than the first half. And then, we have some of the new products like SmartAssist launch which should gain traction and then some of the changes we made on the US distribution structure, again reducing the [Indecipherable] to help really drive Impella adoption wider and deeper in some of that outside the US performance primarily, Germany and Japan. So, I do think growth will pick up in the second half of the year based on those initiatives

Raj Denhoy -- Jefferies -- Analyst

Great, thank you.

Operator

Thank you. Our next question comes from Matthew O'Brien with Piper Jaffray. Your line is open.

Matthew O'Brien -- Piper Jaffray -- Analyst

Good morning. Thanks for taking my questions. Just real quick one upfront -- or two parts upfront. The proposed reimbursement changes are going to go final here in a couple of weeks. Are those incorporated or any kind of pressure there incorporated in guidance for the back half? And then, Todd, I think the utilization rate of US Impella was actually higher than the actual growth rate. Was there a little bit of pricing pressure in the quarter? And then I have one follow-up.

Todd A. Trapp -- Vice President and CFO

So, I'll take the US patient utilization. So yes, utilization was up 13% in the US. Our revenue growth rate was up 11%. The big driver there is that we opened up fewer sites in the quarter. So if you went back and looked at the average sites we opened up the last four quarters, it's roughly 120 sites. We opened up 62 sites in the quarter and that impacted our revenue on a ballpark about $3 million, which translates to about 2% revenue growth. So, it's really just the lower site openings in Q1.

Michael R. Minogue -- Chairman, President and CEO

And Matt, this is Mike. So on the question of the CMS update, we're coming -- will be coming out. The guidance does take that into account. And as we've communicated in the past, we just always want to make sure that CMS has the accurate hospital charges based on all the changes that have been made in DRG 215 over the last 3 years.

Matthew O'Brien -- Piper Jaffray -- Analyst

Okay, that's helpful. Thanks, Mike. And then the follow-up questions on the business going forward; Japan's doing really well, Europe is still growing nicely. It seems like there is a little lull right now in the US which is fixable. But I think what a lot of investors are trying to get their minds around is historically you've talked about 25% to 30% topline growth. Are you guys more kind of a 15% to 20% consistent topline grower over a multiyear period going forward?

Michael R. Minogue -- Chairman, President and CEO

So Matt, we've only given the forecast for this fiscal year but we do expect to go back to be a better -- one of the better growing MedTech companies. Obviously, the -- lot of the numbers we've been getting bigger over the last five years. But again, I think that we now have half of our population that has incredible upside. We've essentially got a critical mass. We're in all the heart hospitals, but what we need to do is get with more physicians at those centers, and at those community hospitals we need to establish programs, not one-off users.

And so, that's what you're going to start to see a little bit of a shift, which means that there is upside. And then longer term, we do have the Impella 5.5, we do have some of the improvements coming on the expandable sheath for the Impella CP which will innovate away the concerns of Access Closure, and then we have also new geographies along with new publications and new studies that would be entirely new population. So, that's what we're focused on. We again always try to adapt and execute and be very efficient in both being a top grower but also a disciplined business that delivers an ever improving net income.

Matthew O'Brien -- Piper Jaffray -- Analyst

Fair enough, thank you.

Operator

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

Jayson Bedford -- Raymond James -- Analyst

Hi, good morning. Just a couple of quick ones. Just on the US growth, is the slowdown widespread across your entire customer base or are you seeing slower growth on a specific segment of the user base? You've mentioned to me hospitals a few times. I'm just curious if there is a trend here from a user standpoint.

Michael R. Minogue -- Chairman, President and CEO

Jayson, that's a good question, as again as you imagine, since we collect data on nearly every commercial patient by hospital by name, we can review that weekly, daily, and we do. It is not widespread. It's essentially around 25% of in-pockets where they're flat to slightly down. And then the other part of the country has -- continues to see the kind of growth rates that we've been putting up historically. So, we've got ways to address the areas that are down. Some of those areas are better alignment for the distribution, some are more heads and some have had potentially open spaces or turnover, or physicians have relocated that have been bigger champions for us. So, that's where we're really focused on. And to simplify it, it's an organizational design that allows us to go into those pockets and build the programs themselves.

Jayson Bedford -- Raymond James -- Analyst

Okay, that's helpful. And then just secondly, did you mentioned growth in high-risk PCI and shock? I apologize if I missed it.

Todd A. Trapp -- Vice President and CFO

Yes, we did. So growth in high-risk PCI in the quarter was 12% and for shock it was 14%.

Jayson Bedford -- Raymond James -- Analyst

Thank you.

Operator

Thank you. Our next question comes from David Lewis from Morgan Stanley. Your line is open.

David Lewis -- Morgan Stanley -- Analyst

Great, thanks. Just a couple of questions. Mike, just first off, PCI was weaker last quarter, shock was much weaker this quarter. And these businesses have similar commercial channels but very different end markets. So, any thoughts on why we've seen kind of weakness in both in these last two quarters?

Michael R. Minogue -- Chairman, President and CEO

Yeah, so David -- so I would go through and analyzed both the quarter but I'd also look at it by month. So in Q4, we saw March fall down, primarily on high-risk PCI, not necessarily in shock. And then in April, we saw a rebound of 17% overall, but we saw a 16% for high-risk PCI growth and 20% for shock. So, that April looked like we had adjusted enough to see already an immediate impact. But again as we got into the summer months, even though it's consistent with year-over-year, with the changes, with some of the noise, it did hold up in June. And so that's one of the things we're looking at.

And if I look at Q4, to go back to where we were, again you were still seeing pretty -- much higher January and February months relative to high-risk PCI and shock themselves. And so, I think that's -- the learning curve for us is understanding where we down, why were we down, because we do have areas that have very significant growth in high-risk PCI around the US. And what's interesting is with the Dr. Burzotta paper from Europe, we're seeing a nice lift in high-risk PCI in Germany, which historically had been more of a shock market for us. So -- and then of course, we've got -- always have pockets of extreme growth in new areas where we've invested.

So those are the things we're looking at, kind of measuring where that territory is relative to the adoption curve. But we're doing exactly the analysis that you're talking about.

David Lewis -- Morgan Stanley -- Analyst

Okay. And just a follow-up on and a quick one for Todd. Just want to follow-up with you, Mike, it's just that dynamic of large center traction getting more challenging, are you seeing that equally in PCI and shock? And then for Todd, to deliver the top end of the guidance our math is sort of momentum stability at the top end, so the question is, you talked about April trends, how did July trend? Thank you so much.

Todd A. Trapp -- Vice President and CFO

Yeah, I mean David, we're not going to start given out monthly revenue by high-risk PCI and cardiogenic shock. I would tell you that the -- we factored in the guidance of 15% to 20% based on how we exited Q1 and what we've seen so far in July.

Operator

Thank you. Our next question comes from Chris Cooley from Stephens. Your line is open.

Chris Cooley -- Stephens -- Analyst

Good morning. I appreciate you taking the questions. Just two quick ones from me at this point, maybe either for Mike or Todd. Does the increased focus on the community hospitals here in the United States any way, shape or fashion alter your views on continued geographic expansion outside of your primary markets in Germany and Japan?

And then as -- just as a follow-up, just asking both here [Phonetic] in succession; I'm curious, Mike, you're talking about growing utilization in community hospitals and the focus there really being on education. But there's always been a very large clinical body of evidence in support of Impella utilization. So I'm curious if you think it's really an education focus here or is it an economic understanding, both from an episodic standpoint of the procedure but also maybe from a continuum perspective at that community hospital level? And as a result, if it's the latter, does that really mean that we need to see DRG 215 in its revised or whatever it may be rate of reimbursement first before you can really make a big push there that's sustainable? Thank you.

Michael R. Minogue -- Chairman, President and CEO

So, Chris, a lot of questions there. I'll do my best to hit all of them, and I'll ask for clarification if I miss it. The first one is the increased focus on the community hospitals and how does that affect outside the US; the answer is it always has and it was part of our planning process. Since we have this infrastructure in the United States that allows us to provide this support in the ICU, on phone and now with Impella Connect, it's -- it allowed us to see the importance of protocols but also the importance of us being able to touch down -- touch them even over the phone. And because we know from our internal data that we have an we have an impact and we improve outcomes in the IQ database.

As we've been waiting to plant the seeds and go around the world, one of the keys to that success is establishing trading centers in the countries and then bringing something like SmartAssist onto the console itself. So every time a patient is being supported, the console itself with the optical sensor and the information lets the physician and the nurses know where the pump is, how it's doing and how it's working with the heart, and also most important allow us to wean appropriately.

So SmartAssist really does make the management, the implantation much easier. And then what you're seeing in the next phase of this as we bring Impella Connect over the top, which is a real-time monitoring online. And so, we announced today that we received Impella Connect approval in Japan. And you're going to see us roll it out in Japan, so that countries like Japan where we have a smaller number or other countries that we launch into will be utilizing Impella Connect to monitor their patients real-time to capture data to give benchmark analysis back to the hospitals so they can continue to improve their outcomes and also make ourselves more productive in the training process.

At a high level what that means is, instead of selling a product or focusing on at one patient at a time or procedure, we're really going to establish programs where people are getting a feedback loop on their outcomes and we're looking at some of the best practices, whether it's high-risk PCI or shock. So, that's the first part of your question.

Your second question had to do with the education level based on the quality of the data and you mentioned that -- or it wasn't an economic means, so are we waiting for the DRG 215. So, what I would say for that is, Impella -- first of all, if you recover somebody's heart and you increase survival, you're talking about one of the most cost effective applications in med-tech. So sending Soma, our patient, home with their own heart, that's UnitedHealthcare. That's a $1 million patient in hospital charges in the next 6 months to 12 months. So it's such an important thing to be cost effective, but in our case, this is life or death and the quality of life measurement from a CMS again is reasonable and necessary.

On the regulatory side, there is also a mandated protection or liability in treating shock patients because of their risk factor. The FDA safe and effective label allows our hospitals and our physicians to know that a regulatory body has validated this technology, and that to me is one of the most important components of our data. However, we continue to need to do more publications, more studies. And in the space of science, you can never have enough studies and there is always room for improvement and there is always room for more exploratory investigations, and that's where we are.

A lot of times, investors after reading all the clinical papers will say to me, how can it take so long. This is -- obviously the clinical data is very positive. And sometimes I remind them that they've already now read more information and more clinical papers that many of the physicians just because of the burden of work that's on the physicians, the lack of time they have in order to just do research and study because they're so deep and they've got so many different specialties, and so a lot of times we just have to continue to take this -- the summaries of our studies and simplify them. And today, I'd say that there is many people that still are not aware of all the details, even from our FDA studies such as PROTECT II or some of the NCSI data. And so, that's up to us to do a better job.

Chris Cooley -- Stephens -- Analyst

Thank you.

Operator

Thank you. And I'm showing no further questions from our phone lines. I'd now like to turn the conference back over to Mike Minogue for any closing remarks.

Michael R. Minogue -- Chairman, President and CEO

Thank you, everyone, for your time today. We appreciate the questions. And if you have any follow-up, please feel free to reach out to us directly. Have a great day.

Operator

[Operator Closing Remarks]

Duration: 55 minutes

Call participants:

Ingrid Goldberg Ward -- Director, Investor Relations

Michael R. Minogue -- Chairman, President and CEO

Todd A. Trapp -- Vice President and CFO

Margaret Kaczor -- William Blair -- Analyst

Chris Pasquale -- Guggenheim -- Analyst

Raj Denhoy -- Jefferies -- Analyst

Matthew O'Brien -- Piper Jaffray -- Analyst

Jayson Bedford -- Raymond James -- Analyst

David Lewis -- Morgan Stanley -- Analyst

Chris Cooley -- Stephens -- Analyst

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