ABIOMED INC (Form: 10-Q, Received: 08/06/2015 16:39:55)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-09585

ABIOMED, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

04-2743260

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

22 CHERRY HILL DRIVE

DANVERS, MASSACHUSETTS 01923

(Address of principal executive offices, including zip code)

(978) 646-1400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is, a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of July 31, 2015, 42,054,091 shares of the registrant’s common stock, $.01 par value, were outstanding.

ABIOMED, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION:

Item 1.	Condensed Financial Statements (unaudited)		3

	Condensed Consolidated Balance Sheets as of June 30, 2015 and March 31, 2015		3

	Condensed Consolidated Statements of Operations for the three months ended June 30, 2015 and 2014		4

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2015 and 2014		5

	Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2015 and 2014		6

	Notes to Condensed Consolidated Financial Statements (unaudited)		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		25

Item 4.	Controls and Procedures		26

PART II - OTHER INFORMATION:

Item 1.	Legal Proceedings		27

Item 1A.	Risk Factors		27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		27

Item 3.	Defaults Upon Senior Securities		27

Item 4.	Mine Safety Disclosures		27

Item 5.	Other Information		27

Item 6.	Exhibits		28

SIGNATURES			29

NOTE REGARDING COMPANY REFERENCES

Throughout this report on Form 10-Q (the “Report”), “Abiomed, Inc.,” the “Company,” “we,” “us” and “our” refer to ABIOMED, Inc. and its consolidated subsidiaries.

NOTE REGARDING TRADEMARKS

ABIOMED, ABIOCOR, IMPELLA, IMPELLA CP, IMPELLA RP and Symphony are trademarks of ABIOMED, Inc., and are registered in the U.S. and certain foreign countries. BVS is a trademark of ABIOMED, Inc. and is registered in the U.S. AB5000 is a trademark of ABIOMED, Inc. IMPELLA and RECOVER are trademarks of Abiomed Europe GmbH, a subsidiary of ABIOMED, Inc., and are registered in the U.S. and certain foreign countries.

PART 1. FINANCIAL INFORMATION

ITEM 1:

FINANCIAL STATEMENTS

ABIOMED, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share data)


	June 30, 2015			March 31, 2015

ASSETS
Current assets:
Cash and cash equivalents	$	40,431		$	22,401
Short-term marketable securities		114,489			109,557
Accounts receivable, net		34,372			31,828
Inventories		21,230			16,774
Prepaid expenses and other current assets		4,003			4,479
Deferred tax assets, net		29,587			35,100

Total current assets		244,112			220,139
Long-term marketable securities		1,501			13,996
Property and equipment, net		10,218			9,127
Goodwill		32,243			31,534
In-process research and development		15,041			14,711
Long-term deferred tax assets, net		45,206			45,206
Other assets		3,685			3,654

Total assets	$	352,006		$	338,367

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,617		$	10,389
Accrued expenses		19,798			21,894
Deferred revenue		7,868			7,036

Total current liabilities		36,283			39,319
Other long-term liabilities		198			183
Contingent consideration		6,661			6,510
Long-term deferred tax liabilities		813			795

Total liabilities		43,955			46,807

Commitments and contingencies (Note 10)
Stockholders’ equity:
Class B Preferred Stock, $.01 par value		—			—
Authorized - 1,000,000 shares; Issued and outstanding - none
Common stock, $.01 par value		420			413
Authorized - 100,000,000 shares; Issued - 43,354,209 shares at June 30, 2015 and 42,618,717 shares at March 31, 2015;
Outstanding - 42,018,530 shares at June 30, 2015 and 41,335,773 shares at March 31, 2015
Additional paid in capital		474,528			465,046
Accumulated deficit		(128,363	)		(137,222	)
Treasury stock at cost - 1,335,679 shares at June 30, 2015 and 1,282,944 shares at March 31, 2015		(22,812	)		(19,347	)
Accumulated other comprehensive loss		(15,722	)		(17,330	)

Total stockholders’ equity		308,051			291,560

Total liabilities and stockholders’ equity	$	352,006		$	338,367

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)

ABIOMED, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)


	Three Months Ended June 30,
	2015		2014
Revenue:
Product revenue	$	73,426	$	48,660
Funded research and development		6		151

		73,432		48,811

Costs and expenses:
Cost of product revenue		10,868		9,689
Research and development		10,210		9,062
Selling, general and administrative		37,323		31,598

		58,401		50,349

Income (loss) from operations		15,031		(1,538	)

Other income:
Investment income, net		63		44
Other income, net		53		11

		116		55

Income (loss) before income taxes		15,147		(1,483	)
Income tax provision		6,288		226

Net income (loss)	$	8,859	$	(1,709	)


Basic net income (loss) per share	$	0.21	$	(0.04	)
Basic weighted average shares outstanding		41,696		40,062

Diluted net income (loss) per share	$	0.20	$	(0.04	)
Diluted weighted average shares outstanding		44,410		40,062

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)

ABIOMED, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(in thousands, except per share data)


	Three Months Ended June 30,
	2015		2014
Net income (loss)	$	8,859	$	(1,709	)

Other comprehensive income (loss):
Foreign currency translation gains (losses)		1,598		(436	)
Net unrealized gains on marketable securities		10		27

Other comprehensive income (loss)		1,608		(409	)

Comprehensive income (loss)	$	10,467	$	(2,118	)

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)

ABIOMED, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Three Months Ended June 30,
	2015			2014
Operating activities:
Net income (loss)	$	8,859		$	(1,709	)
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		663			621
Bad debt expense		(37	)		31
Stock-based compensation		4,799			4,290
Write-down of inventory		299			206
Excess tax benefit from stock-based awards		(81	)		—
Deferred tax provision		5,805			225
Change in fair value of contingent consideration		151			—
Changes in assets and liabilities:
Accounts receivable		(2,456	)		1,548
Inventories		(4,549	)		(234	)
Prepaid expenses and other assets		463			(255	)
Accounts payable		(1,767	)		(1,049	)
Accrued expenses and other long-term liabilities		(2,063	)		(919	)
Deferred revenue		828			435

Net cash provided by operating activities		10,914			3,190
Investing activities:
Purchases of marketable securities		(42,661	)		(24,524	)
Proceeds from the sale and maturity of marketable securities		50,263			35,730
Purchases of property and equipment		(1,863	)		(380	)

Net cash provided by investing activities		5,739			10,826
Financing activities:
Proceeds from the exercise of stock options		4,589			820
Excess tax benefit from stock-based awards		81			—
Taxes paid related to net share settlement of vesting of stock awards		(3,465	)		(1,013	)
Proceeds from the issuance of stock under employee stock purchase plan		5			—

Net cash provided by (used for) financing activities		1,210			(193	)
Effect of exchange rate changes on cash		167			1

Net increase in cash and cash equivalents		18,030			13,824
Cash and cash equivalents at beginning of period		22,401			20,916

Cash and cash equivalents at end of period	$	40,431		$	34,740

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	274		$	172
Supplemental disclosure of non-cash investing and financing activities:
Property and equipment in accounts payable and accrued expenses		123			215

The accompanying notes are an integral part of the condensed consolidated financial statements (unaudited)

ABIOMED, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(In thousands, except share data)

Note 1. Nature of Business and Basis of Preparation

Abiomed, Inc. (the “Company” or “Abiomed”), is a leading provider of mechanical circulatory support devices and offers a continuum of care to heart failure patients. The Company develops, manufactures and markets proprietary products that are designed to enable the heart to rest, heal and recover by improving blood flow and/or performing the pumping function of the heart. The Company’s products are used in the cardiac catheterization lab, or cath lab, by interventional cardiologists and in the heart surgery suite by heart surgeons for patients who are in need of hemodynamic support prophylactically or emergently before, during or after angioplasty or heart surgery procedures.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial reporting and in accordance with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by GAAP for complete financial statements. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015 that has been filed with the Securities and Exchange Commission (the “SEC”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which are of a normal recurring nature and are necessary for a fair presentation of results for the interim periods presented. The results of operations for any interim period may not be indicative of results for the full fiscal year or any other subsequent period.

There have been no changes in the Company’s significant accounting policies for the three months ended June 30, 2015 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2015 that has been filed with the SEC.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers to provide updated guidance on revenue recognition. ASU 2014-09 requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies may need to use more judgment and make more estimates than under today’s guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the Company in the first quarter of fiscal 2019. The Company is currently evaluating the impact of adopting ASU 2014-09 on its condensed consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which applies to inventory that is measured using first-in, first-out (“FIFO”) or average cost methods. Under the updated guidance, an entity should measure inventory that is within scope at the lower of cost and net realizable value, which is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Subsequent measurement is unchanged for inventory that is measured using last-in, last-out (“LIFO”). This ASU is effective for annual and interim periods beginning after December 15, 2016, and should be applied prospectively with early adoption permitted at the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of adopting ASU 2015-11 on its condensed consolidated financial statements.

Note 2. Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of dilutive common shares outstanding during the period. Diluted shares outstanding are calculated by adding to the weighted average shares outstanding any potential dilutive securities outstanding for the period. Potential dilutive securities include stock options, restricted stock units, performance-based stock awards and shares to be purchased under the Company’s employee stock

purchase plan. In periods when a net loss is reported, all common stock equivalents are excluded from the calculation because they would have an anti-dilutive effect, meaning the loss per share would be reduced. Therefore, in periods when a loss is reported, basic and dilutive loss per share are the same. The Company’s basic and diluted net income (loss) per share for the three months ended June 30, 2015 and 2014 were as follows (in thousands, except per share data):


	Three Months Ended June 30,
	2015		2014
Basic Net Income (Loss) Per Share
Net income (loss)	$	8,859	$	(1,709	)

Weighted average shares used in computing basic net income (loss) per share		41,696		40,062

Net income (loss) per share - basic	$	0.21	$	(0.04	)


	Three Months Ended June 30,
	2015		2014
Diluted Net Income (Loss) Per Share
Net income (loss)	$	8,859	$	(1,709	)

Weighted average shares used in computing basic net income (loss) per share		41,696		40,062
Effect of dilutive securities		2,714		—

Weighted average shares used in computing diluted net income (loss) per share		44,410		40,062
Net income (loss) per share - diluted	$	0.20	$	(0.04	)

For the three months ended June 30, 2015, approximately 2,000 shares underlying out-of-the-money stock options were not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. Also, approximately 234,000 restricted shares in three months ended June 30, 2015 related to performance-based awards for which milestones have not been met, were not included in the computation of diluted earnings per share.

For the three months ended June 30, 2014, approximately 3,678,000 shares underlying stock options and approximately 1,242,000 restricted shares and restricted stock units were excluded from the calculation of diluted weighted average shares outstanding because the Company incurred a loss in the period and to include them would have been anti-dilutive.

Note 3. Acquisitions

Acquisition of ECP Entwicklungsgesellschaft mbH

On July 1, 2014, the Company entered into a share purchase agreement with its wholly owned German subsidiary, Abiomed Europe GmbH (“Abiomed Europe”) and Syscore GmbH (“Syscore”), a limited liability company located in Berlin, Germany, providing for the Company’s acquisition of all of the share capital of ECP Entwicklungsgesellschaft mbH (“ECP”), a limited liability company incorporated in Germany. ECP is engaged in research, development, prototyping and the production of a percutaneous expandable catheter pump which increases blood circulation from the heart with an external drive shaft. The Company’s acquisition of ECP closed on July 1, 2014.

The Company acquired ECP for $13.0 million in cash, with additional potential payouts totaling $15.0 million payable to Syscore based on the achievement of certain technical, regulatory and commercial milestones. These milestone payments may be made, at the Company’s option, by a combination of cash or the Company’s common stock. With respect to such milestone payments, the share purchase agreement provides:

•

that, upon the earlier of (i) the Company’s receipt of European CE Marking approval relating to the sale of an expandable device based on certain patent rights acquired from ECP, or (ii) the Company’s bringing of a successful claim against a third party competitor (or reaching an economically equivalent settlement) for the infringement of certain patent rights acquired from ECP, it will pay Syscore an additional $7.0 million (provided that if such claim or settlement does not prohibit the third party competitor’s further marketing, production, sale, distribution, lease or use of any violating or infringing products, but only awards monetary damages to the Company or to Abiomed Europe, the amount payable to Syscore shall be limited to the lower of the amount of aggregate damages received and $7.0 million); and

•

that, upon the first to occur of (i) the Company’s successful commercialization of one or more rotatable and expandable devices based on certain patent rights acquired from ECP, where such devices achieve aggregate worldwide revenues of $125.0 million, including the revenues of third-party licensees, or (ii) the Company’s sale of (A) ECP, (B) all or substantially all of ECP’s assets, or (C) certain of ECP’s patent rights, the Company will pay to Syscore the lesser of (x) one-half of the profits earned from such sale described in the foregoing item (ii), after accounting for the costs of acquiring and operating ECP, or (y) $15.0 million (less any previous milestone payment).

ECP’s Acquisition of AIS GmbH Aachen Innovative Solutions

In connection with the Company’s acquisition of ECP, ECP acquired all of the share capital of AIS GmbH Aachen Innovative Solutions (“AIS”), a limited liability company incorporated in Germany, pursuant to a share purchase agreement dated as of June 30, 2014, by and among ECP and AIS’s four individual shareholders. AIS, based in Aachen, Germany, holds certain intellectual property useful to ECP’s business, and, prior to being acquired by ECP, had licensed such intellectual property to ECP.

The purchase price for the acquisition of AIS’s share capital was approximately $2.8 million in cash, which was provided by the Company, and the acquisition closed immediately prior to Abiomed Europe’s acquisition of ECP. The share purchase agreement contains representations, warranties and closing conditions customary for transactions of its size and nature.

Purchase Price Allocation

The acquisition of ECP and AIS was accounted for as a business combination. The purchase price for the acquisition has been allocated to the assets acquired and liabilities assumed based on their estimated fair values.

The acquisition-date fair value of the consideration transferred is as follows:


	Total Acquisition Date Fair Value (in thousands)
Cash consideration	$	15,750
Contingent consideration		6,000

Total consideration transferred	$	21,750

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on July 1, 2014, the date of acquisition (in thousands):


Acquired assets:
Cash and cash equivalents	$	53
Accounts receivable		25
Property and equipment		619
In-process research and development		18,500
Goodwill		1,964
Long-term deferred tax assets		1,874
Other assets acquired		141

Total assets acquired		23,176
Liabilities assumed:
Accounts payable		295
Accrued liabilities		131
Long-term deferred tax liabilities		1,000

Total liabilities assumed		1,426

Net assets acquired	$	21,750

In-process research and development (“IPR&D”) is the estimated fair value of the ECP and AIS technology that had either not reached commercial technological feasibility nor had alternative future use at the time of the acquisition. Therefore the Company considered IPR&D, with assigned values to be allocated among the various IPR&D assets acquired.

Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. The goodwill resulting from these acquisitions arises largely from synergies expected from combining the operations of ECP and AIS with the Company’s existing operations. The goodwill is not deductible for income tax purposes.

Note 4. Marketable Securities and Fair Value Measurements

Marketable Securities

The Company’s marketable securities are classified as available-for-sale securities and, accordingly, are recorded at fair value. The difference between amortized cost and fair value is included in stockholders’ equity.

The Company’s marketable securities at June 30, 2015 and March 31, 2015 are invested in the following:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
	(in $000’s)
At June 30, 2015:
US Treasury mutual fund securities	$	19,487	$	—	$	—		$	19,487
Short-term government-backed securities		94,996		10		(4	)		95,002
Long-term government-backed securities		1,500		1		—			1,501

	$	115,983	$	11	$	(4	)	$	115,990


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Market Value
	(in $000’s)
At March 31, 2015:
US Treasury mutual fund securities	$	19,487	$	—	$	—		$	19,487
Short-term government-backed securities		90,070		9		(9	)		90,070
Long-term government-backed securities		13,999		2		(5	)		13,996

	$	123,556	$	11	$	(14	)	$	123,553

Fair Value Hierarchy

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Level 1 primarily consists of financial instruments whose values are based on quoted market prices such as exchange-traded instruments and listed equities.

Level 2 includes financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including time value, yield curve, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 is comprised of unobservable inputs that are supported by little or no market activity. Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flows, or similar techniques, and at least one significant model assumption or input is unobservable.

The following table presents the Company’s financial instruments recorded at fair value in the condensed consolidated balance sheets, classified according to the three categories described above:


	Level 1		Level 2		Level 3		Total
	(in $000’s)
At June 30, 2015:
Assets
U.S. Treasury mutual fund securities	$	—	$	19,487	$	—	$	19,487
Short-term government-backed securities		—		95,002		—		95,002
Long-term government-backed securities		—		1,501		—		1,501
Liabilities
Contingent consideration		—		—		6,661		6,661

	Level 1		Level 2		Level 3		Total
	(in $000’s)
At March 31, 2015:
Assets
U.S. Treasury mutual fund securities	$	—	$	19,487	$	—	$	19,487
Short-term government-backed securities		—		90,070		—		90,070
Long-term government-backed securities		—		13,996		—		13,996
Liabilities
Contingent consideration		—		—		6,510		6,510

The Company has determined that the estimated fair value of its investments in U.S. Treasury mutual fund securities, short-term government-backed securities and long-term government-backed securities are reported as Level 2 financial assets as they are not exchange-traded instruments.

The Company’s financial liabilities consisted of contingent consideration potentially payable to former ECP shareholders related to the acquisition of ECP in July 2014. This liability is reported as Level 3 as estimated fair value of the contingent consideration related to the acquisition of the ECP requires significant management judgment or estimation and is calculated using the income approach, using various revenue and cost assumptions and applying a probability to each outcome.

The following table summarizes the change in fair value, as determined by Level 3 inputs, of the contingent consideration for the three months ended June 30, 2015:


	(in $000’s)
Balance at March 31, 2015	$	6,510
Additions		—
Payments		—
Change in fair value		151

Balance at June 30, 2015	$	6,661

The change in fair value of the contingent consideration of $0.2 million for the three months ended June 30, 2015 was primarily due to an increase in fair value due to the effect of the passage of time on the fair value measurement of milestones related to the ECP acquisition. Adjustments associated with the change in fair value of contingent consideration are included in research and development expenses on the Company’s condensed consolidated statements of operations.

The following table presents quantitative information about the inputs and valuation methodologies used for the Company’s fair value measurements as of June 30, 2015 classified as Level 3:


	Fair Value at June 30, 2015 (in $000’s)		Valuation Methodology	Significant Unobservable Input	Weighted Average (range, if applicable)
Contingent consideration	$	6,661	Probability weighted income approach	Milestone dates	2018 to 2021
				Discount rate	8% to 12%
				Probability of occurrence	Probability adjusted level of 40% for the base case scenario and 5% to 25% for various upside and downside scenarios

Other Investments

In May 2013 and September 2014, the Company invested $0.8 million and $0.7 million in preferred stock of a private medical technology company. There are no additional outstanding funding commitments associated with this investment.

In November 2014, the Company invested $0.5 million in a 0% interest promissory note to a separate private medical technology company that is convertible into preferred stock of the company based upon a qualified financing as defined in the agreement governing the investment.

In January 2015, the Company invested $0.6 million in a 5% interest promissory note to another private medical technology company. This promissory note and accrued interest is convertible into preferred stock of the company upon a qualified financing as defined in the agreement governing the investment. The Company could also be required to invest an additional $0.4 million in the form of a promissory note if certain milestones are met.

In July 2015, the Company invested $0.8 million for its participation in a preferred stock offering of a private medical technology company.

The Company’s other investments are accounted for using the cost method and are measured at fair value on a nonrecurring basis only if there are identified events or changes in circumstances that may have a significant adverse effect on the fair value of these investments. The aggregate carrying amount of these investments was $3.6 million at each of June 30, 2015 and March 31, 2015, and is classified within other assets in the unaudited condensed consolidated balance sheets.

Note 5. Inventories

The components of inventories are as follows:


	June 30, 2015		March 31, 2015
	(in $000’s)
Raw materials and supplies	$	8,548	$	7,417
Work-in-progress		8,456		6,466
Finished goods		4,226		2,891

	$	21,230	$	16,774

The Company’s inventories relate to its circulatory care product lines, primarily its Impella product platforms. Finished goods and work-in-process inventories consist of direct material, labor and overhead. During the three months ended June 30, 2015 and 2014, the Company recorded $0.3 million and $0.2 million, respectively, in write-downs of inventory.

Note 6. Goodwill and In-Process Research and Development

Goodwill

The carrying amount of goodwill at June 30, 2015 and March 31, 2015 was $32.2 million and $31.5 million, respectively, and has been recorded in connection with the Company’s acquisition of Impella Cardiosystems AG, or Impella, in 2005 and ECP and AIS in July 2014. The goodwill activity is as follows:


	(in $000’s)
Balance at March 31, 2015	$	31,534
Foreign currency translation impact		709

Balance at June 30, 2015	$	32,243

The Company has no accumulated impairment losses on goodwill.

As described in Note 3 “Acquisitions,” in July 2014, the Company acquired ECP and AIS and recorded $18.5 million of IPR&D. The estimated fair value of the IPR&D was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows from the expandable catheter pump technology were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 22.5% and cash flows that have been probability adjusted to reflect the risks of product commercialization, which the Company believes are appropriate and representative of market participant assumptions.

The carrying value of the Company’s IPR&D assets and the change in the balance for the three months ended June 30, 2015 is as follows:


	(in $000’s)
Balance at March 31, 2015	$	14,711
Foreign currency translation impact		330

Balance at June 30, 2015	$	15,041

Note 7. Accrued Expenses

Accrued expenses consist of the following:


	June 30, 2015		March 31, 2015
	(in $000’s)
Employee compensation	$	12,056	$	15,978
Research and development		2,165		1,744
Sales and income taxes		1,732		1,506
Professional, legal and accounting fees		1,345		710
Warranty		883		1,103
Other		1,617		853

	$	19,798	$	21,894

Employee compensation consists primarily of accrued bonuses, accrued commissions and accrued employee benefits at June 30, 2015 and March 31, 2015.

Note 8. Stock-Based Compensation

The following table summarizes stock-based compensation expense by financial statement line item in the Company’s condensed consolidated statements of operations for the three months ended June 30, 2015 and 2014:


	Three Months Ended June 30,
	2015		2014
	(in $000’s)
Cost of product revenue	$	237	$	209
Research and development		931		853
Selling, general and administrative		3,631		3,228

	$	4,799	$	4,290

The components of stock-based compensation for the three months ended June 30, 2015 and 2014 were as follows:


	Three Months Ended June 30,
	2015		2014
	(in $000’s)
Restricted stock units	$	3,903	$	3,420
Stock options		819		799
Employee stock purchase plan		77		71

	$	4,799	$	4,290

Stock Options

The following table summarizes the stock option activity for the three months ended June 30, 2015:


	Options (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at beginning of period		2,892		$	14.72		5.18
Granted		97			66.36
Exercised		(363	)		12.65
Cancelled and expired		(1	)		14.00

Outstanding at end of period		2,625		$	16.92		5.43	$	128,218

Exercisable at end of period		2,020		$	13.02		4.51	$	106,478

Options vested and expected to vest at end of period		2,567		$	16.70		5.37	$	125,940

The aggregate intrinsic value of options exercised was $19.8 million for the three months ended June 30, 2015. The total fair value of options that vested during the three months ended June 30, 2015 was $2.2 million.

The remaining unrecognized stock-based compensation expense for unvested stock option awards at June 30, 2015 was approximately $6.4 million, net of forfeitures, and the weighted-average period over which this cost will be recognized is 2.3 years.

The Company estimates the fair value of each stock option granted at the grant date using the Black-Scholes option valuation model. The weighted average grant-date fair value for options granted during the three months ended June 30, 2015 and 2014 was $27.33 and $8.78 per share, respectively.

The fair value of options granted during the three months ended June 30, 2015 and 2014 were calculated using the following weighted average assumptions:


	Three Months Ended June 30,
	2015			2014
Risk-free interest rate		1.57	%		1.57	%
Expected option life (years)		4.15			4.19
Expected volatility		50.4	%		49.4	%

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for a term consistent with the expected life of the stock options. Volatility assumptions are calculated based on the historical volatility of the Company’s stock and adjustments for factors not reflected in historical volatility that may be more indicative of future volatility. The Company estimates the expected term of options based on historical exercise experience and estimates of future exercises of unexercised options. An expected dividend yield of zero is used in the option valuation model because the Company does not pay cash dividends and does not expect to pay any cash dividends in the foreseeable future. The Company estimates forfeitures based on an analysis of actual historical forfeitures, adjusted to the extent historic forfeitures may not be indicative of forfeitures in the future.

Restricted Stock and Restricted Stock Units

The following table summarizes the activity of restricted stock and restricted stock units for the three months ended June 30, 2015:


	Number of Shares (in thousands)			Weighted Average Grant Date Fair Value (per share)
Restricted stock and restricted stock units at beginning of period		1,160		$	21.90
Granted		598			88.28
Vested		(407	)		22.31
Forfeited		(40	)		12.27

Restricted stock and restricted stock units at end of period		1,311		$	52.39

As of June 30, 2015, there are no restricted stock awards outstanding.

The weighted average grant-date fair value for restricted stock units granted, including performance and market-based awards discussed below, during the three months ended June 30, 2015 and 2014 was $88.28 and $21.55 per share, respectively. Included in the weighted average grant-date fair value for restricted stock units granted during the three months ended June 30, 2015 were 322,980 market based awards which were valued at $107.10 per share in which a Monte Carlo simulation was used to account for the market condition in valuing the award. See details below in “Market Based Awards”.

The total fair value of restricted stock units that vested during the three months ended June 30, 2015 and 2014 was $9.1 million and $8.8 million, respectively. The remaining unrecognized compensation expense for outstanding restricted stock units, including performance and market-based awards, as of June 30, 2015 was $36.7 million and the weighted-average period over which this cost will be recognized is 2.9 years.

On June 29, 2015, the Company’s Board of Directors adopted a non-employee director retirement policy that provides for the accelerated vesting of all stock options, restricted stock units and other equity awards held by a non-employee director if he or she permanently ceases his or her service on the Company’s Board of Directors by reason of death, disability, or the non-employee director’s retirement following at least five years of service and so long as his or her age plus service equals or exceeds 65. This policy accelerated the vesting on outstanding unvested restricted stock units held by retirement eligible non-employee directors and resulted in stock-based compensation expense of $1.4 million for the three months ended June 30, 2015.

Performance and Market-Based Awards

Included in the restricted stock units activity discussed above are certain awards that vest subject to certain performance and market-based criteria. The remaining unrecognized compensation expense for outstanding performance and market-based restricted stock units as of June 30, 2015 was $27.3 million and the weighted-average period over which this cost will be recognized is 3.1 years.

Performance-Based Awards

In May 2015, performance-based awards of restricted stock units for the potential issuance of 183,940 shares of common stock were issued to certain executive officers and employees, all of which vest upon achievement of prescribed service milestones by the award recipients and performance milestones by the Company. As of June 30, 2015, the Company is recognizing compensation expense based on the probable outcome related to the prescribed performance targets on the outstanding awards.

In May 2014, performance-based awards of restricted stock units for the potential issuance of 379,752 shares of common stock were issued to certain executive officers and employees, all of which vest upon achievement of prescribed service milestones by the award recipients and performance milestones by the Company. The Company met the prescribed performance milestones in fiscal 2015 such that the remaining outstanding 222,563 shares of common stock as of June 30, 2015 will vest subject to service requirements for vesting for these employees. The compensation expense is being recognized accordingly over the remaining service term.

In March 2014, the Company modified the performance condition on 50,000 restricted stock units originally granted in June 2011. During the three months ended June 30, 2015, the Company reversed $1.0 million that had been previously recorded as stock-based compensation expense based on the expectation that it is not probable that certain performance milestones related to this award will be achieved within the time period required by the award.

In May 2013, performance-based awards of restricted stock units for the potential issuance of 268,988 shares of common stock were issued to certain executive officers and employees, all of which vest upon achievement of prescribed service milestones by the award recipients and performance milestones by the Company. The Company met the prescribed performance milestones in fiscal 2014 such that the remaining outstanding 148,995 shares of common stock as of June 30, 2015 will vest subject to service requirements for vesting for these employees. The compensation expense is being recognized accordingly over the remaining service term.

Market-Based Awards

In June 2015, the Company awarded certain executive officers a total of up to 322,980 market-based restricted share units. These restricted stock units will vest and result in the issuance of common stock based on continuing employment and the relative ranking of the total shareholder return (“TSR”) of the Company’s common stock in relation to the TSR of the component companies in the S&P Health Care Equipment Select Industry Index over a three-year performance period based on a comparison of average closing stock prices in June 2015 and June 2018. The actual number of market-based restricted stock units that may be earned ranges from 0% to 300% of the target number of shares. One-half of the market-based restricted stock units that vest based on performance as described above will vest in June 2018 following the end of the three-year performance period on and the remaining one-half will vest one year thereafter.

The Company used a Monte Carlo simulation model to estimate that the grant-date fair value of the restricted stock units. The fair value related to the restricted stock units will be recorded as compensation expense over the period from date of grant to June 2018 regardless of the actual TSR outcome reached.

The table below sets forth the assumptions used to value the awards and the estimated grant-date fair value:


Risk-free interest rate		1.10	%
Dividend yield		0	%
Remaining performance period (years)		2.96
Expected volatility		47.2	%
Estimated grant date fair value (per share)	$	107.10
Target performance (number of shares)		107,660

Note 9. Income Taxes

The income tax provision represents the Company’s federal and state income tax obligations as well as foreign tax provisions. The Company’s income tax provision was $6.3 million and $0.2 million for the three months ended June 30, 2015 and June 30, 2014, respectively. The Company used an estimated annual effective tax rate of 41.5% and (15.2)% to calculate the quarterly tax provision for the three months ended June 30, 2015 and June 30, 2014, respectively. The estimated annual effective income tax rate is based upon estimated income before income taxes for the year, the geographical composition of the estimated income before taxes and estimated permanent differences. The estimated annual effective income tax rate may fluctuate from quarter to quarter and may differ from the actual tax rate recognized in fiscal 2016 for various reasons, including estimates of income before taxes, tax legislation, permanent differences, discrete items, and any adjustments between tax provision calculations and filed tax returns.

The significant differences between the statutory tax rate and effective tax rate for the three months ended June 30, 2015 were as follows:


	Three Months Ended June 30,
	2015			2014
Statutory income tax rate		35.0	%		35.0	%
Increase (decrease) resulting from:
Losses not benefited					(50.2	)
Credits		(1.6	)		—
State taxes, net		3.4			—
Permanent differences		3.9			—
Other		0.8			—

Effective tax rate		41.5	%		(15.2	)%

The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of multiple state and foreign jurisdictions. Fiscal years 2012 through 2015 remain open to examination in Germany. All tax years remain subject to examination by the Internal Revenue Service and state tax authorities, because the Company has net operating loss and tax credit carryforwards which may be utilized in future years to offset taxable income, those years may also be subject to review by relevant taxing authorities if the carryforwards are utilized.

Note 10. Commitments and Contingencies

Commitments

In April 2015, the Company entered into an amendment to lease an additional 24,560 square feet of space at its existing headquarters in Danvers, Massachusetts. The Company has certain rights to terminate the lease early, subject to the payment of a specified termination fee based on the timing of the termination, as further outlined in the lease amendment. The amendment also grants the Company a one-time right of first offer to lease new space in the facility and a one-time first right of refusal to buy the facility, subject to certain conditions set forth therein This facility encompasses most of the Company’s U.S. operations, including research and development, manufacturing, sales and marketing and general and administrative departments. The monthly lease payments over the term of the lease are as follows:

•

The base rent for May 2014 through December 2015 is $74,050 per month; and

•

The base rent for January 2016 through February 2016 will be $85,818 per month; and

•

The base rent for March 2016 through February 2018 will be $82,518 per month; and

•

The base rent for March 2018 through February 2021 will be $85,030 per month.

The Company’s European headquarters is located in Aachen, Germany and consists of approximately 33,000 square feet of space under an operating lease. In July 2013, the Company entered into a lease agreement to continue renting its existing space in Aachen, Germany through July 31, 2023. The lease payments are approximately 34,500€ (euro) (approximately U.S. $37,400 at March 31, 2015 exchange rates) per month. The building houses most of the manufacturing operations for the Impella product line as well as certain research and development functions and the sales, marketing and general and administrative functions for most of its product lines sold in Europe and the Middle East.

License Agreement

In April 2014, the Company entered into an exclusive license agreement with Opsens, Inc. for the rights to certain optical sensor technologies in the field of cardio-circulatory assist devices. The Company made a $1.5 million upfront payment upon execution of the agreement and agreed to make additional payments of up to $4.5 million upon the achievement of certain development milestones.

Litigation

From time to time, the Company is involved in legal and administrative proceedings and claims of various types. In some actions, the claimants seek damages, as well as other relief, which, if granted, would require significant expenditures. The Company records a liability in its condensed consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its condensed consolidated financial statements.

On October 26, 2012, the Company was informed that the Department of Justice, United States Attorney’s Office for the District of Columbia was conducting an investigation (“Marketing and Labeling Investigation”) focused on the Company’s marketing and labeling of the Impella 2.5. On October 31, 2012, the Company accepted service of a subpoena related to this investigation seeking documents and other materials related to the Impella 2.5. The Company cooperated fully with the Marketing and Labeling Investigation since its inception, and on June 29, 2015, the Company received confirmation that the Department of Justice has closed the Marketing and Labeling Investigation without taking enforcement action.

On April 25, 2014, the Company received a subpoena from the Boston regional office of the United States Department of Health and Human Services, or HHS, Office of Inspector General requesting materials relevant to the Company’s reimbursement of expenses and remuneration to healthcare providers for a six month period from July 2012 through December 2012 in connection with a civil investigation under the False Claims Act (the “FCA Investigation”). The Company submitted the requested documents to HHS and believes that it substantially complied with the subpoena. On November 6, 2014, the Company received notice from the Department of Justice, United States Attorney’s Office for the District of Massachusetts in the form of a Civil Investigative Demand (“CID”) requesting additional materials relating to this matter for the time period of January 1, 2012 through December 31, 2013. The Company is currently is the process of responding to the additional requests for information contained in the CID, and other informal requests, and intends to continue to cooperate with the U.S. Attorney’s Office in connection with the FCA Investigation.

The Company is unable to estimate a potential liability with respect to the FCA Investigation. There are numerous factors that make it difficult to meaningfully estimate possible loss or range of loss at this stage of the investigation, including that: the investigation remains in a relatively early stage, there are significant factual and legal issues to be resolved and information obtained or rulings made during any potential lawsuits or investigations could affect the methodology for calculation. Therefore, the Company is unable at this time to estimate any possible losses and accordingly, no adjustment has been made to the financial statements to reflect the outcome of these uncertainties.

Note 11. Segment and Enterprise Wide Disclosures

The Company operates in one business segment—the research, development and sale of medical devices to assist or replace the pumping function of the failing heart. The Company’s chief operating decision maker (determined to be the Chief Executive Officer) does not manage any part of the Company separately, and the allocation of resources and assessment of performance are based on the Company’s consolidated operating results. Approximately 76% and 77% of the Company’s total consolidated assets were located within the U.S. as of June 30, 2015 and March 31, 2015, respectively. The remaining assets were located primarily in Germany and included goodwill and IPR&D of $47.3 million and $46.2 million at June 30, 2015 and March 31, 2015, respectively, associated with the Impella acquisition in May 2005 and ECP acquisition in July 2014. Total assets outside of the U.S. excluding goodwill and IPR&D amounted to 11% and 10% of total consolidated assets as of June 30, 2015 and March 31, 2015, respectively. International sales (primarily in Europe) accounted for 8% and 11% of total revenue for the three months ended June 30, 2015 and 2014, respectively.

ITEM 2:

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward Looking Statements

This Report may contain “forward looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be accompanied by such words as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “target,” “will” and other words and terms of similar meaning. These forward-looking statements address various matters including, among others, future actions related to ongoing investigations and expenditures related thereto; our expectations with respect to submissions to and approvals from regulatory bodies, such as the FDA, including our plans to submit Impella 5.0 and Impella CP as PMA supplements; the development and commercialization of new and existing products and anticipated costs, including research and development, sales and marketing and training costs associated with product development and commercialization; expected capital expenditures for the fiscal year ending March 31, 2016; commercial plans for our products into new markets such as Japan; demand and expected shipments of our products; anticipated shifts in the revenue mix associated with our products; and our ability to increase revenues from our Impella line of products and the sufficiency of revenues to fund future operations. 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. Applicable risks and uncertainties include, among others, our inability to predict the outcome of investigations and litigation and associated expenses; possible delays in our research and development programs; our ability to obtain regulatory approvals and market our products, and uncertainties related to regulatory processes; greater government scrutiny and regulation of the medical device industry and our ability to respond to changing laws and regulations affecting our industry, including any reforms to the regulatory approval process administered by the FDA, including the 510(k) process and 515 Program Initiative, and changing enforcement practices related thereto; the inability to manufacture products in commercial quantities at an acceptable cost; the acceptance by physicians and hospitals of our products; the impact of competitive products and pricing; uncertainties associated with future capital needs and the risks identified under Item 1A of Part I of our Annual Report on Form 10-K, for the year ended March 31, 2015, as well as the other information we file with the Securities and Exchange Commission. Readers are cautioned not to place considerable reliance on any forward-looking statements contained in this Report, which speak only as of the date of this Report. We undertake no obligation to update or revise these forward-looking statements whether as a result of new information, future events or otherwise, unless required by law. Our business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.

Overview

We are a leading provider of temporary percutaneous mechanical circulatory support devices and we offer a continuum of care to heart failure patients. 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 performing 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 heart surgeons. A physician may use our devices for patients who are in need of hemodynamic support prophylactically or emergently before, during or after angioplasty or heart surgery procedures. We believe heart recovery is the optimal clinical outcome for patients experiencing heart failure because it enables patients to go home with their own native heart and restores their quality of life. In addition, we believe that for the care of such patients, heart recovery is the most cost-effective solution for the healthcare system.

Our strategic focus and the driver of the majority of our revenue growth is the market penetration of our Impella family of products. Our Impella 2.5 product received 510(k) clearance in June 2008 from the U.S Food and Drug Administration, or FDA, for partial circulatory support for up to six hours. In March 2015, we received Pre-Market Approval, or PMA, from the FDA for Impella 2.5 during elective and urgent high-risk percutaneous coronary intervention, or PCI, procedures. Impella 2.5 is the first hemodynamic support device to receive a PMA indication for use during high-risk PCI procedures, demonstrating its safety and effectiveness for this complex patient population. With this approval, the Impella 2.5 is a temporary (up to six hours) ventricular support device indicated for use during high-risk PCI performed in elective or urgent hemodynamically stable patients with severe coronary artery disease and depressed left ventricular ejection fraction, when a heart team, including a cardiac surgeon, has determined high-risk PCI is the appropriate therapeutic option. Use of the Impella 2.5 in these patients may prevent hemodynamic instability that may occur during planned temporary coronary occlusions and may reduce peri- and post-procedural adverse events. The product labeling allows for the clinical decision to leave Impella 2.5 in place beyond the intended duration of up to six hours due to unforeseen circumstances. As required by our PMA approval, we will conduct a single-arm, post approval study on the Impella 2.5, collecting data on high-risk PCI patients. The study will be a prospective, multi-center study comprised of 369 patients from 70 sites supported with the Impella 2.5 system. The Impella 2.5 heart pump is supported by clinical guidelines, has been eligible to be reimbursed in the U.S. by the Centers for Medicare & Medicaid Services, or CMS under ICD-9-CM code 37.68 since 2008 for multiple indications, including high-risk PCI. On July 31, 2015, the CMS reconfirmed Impella reimbursement levels and confirmed that the existing Impella MS-DRG mapping will remain unchanged in the transition from ICD-9 to ICD-10 on October 1, 2015.

We received 510(k) clearance in April 2009 for our Impella 5.0 and Impella LD devices for circulatory support for up to six hours. These devices are larger and provide more blood flow to patients than the Impella 2.5. In September 2012, our Impella CP product received 510(k) clearance from the FDA for partial circulatory support for up to six hours. The Impella CP and Impella 5.0 will be submitted in the future as PMA supplements and will retain their 510(k) clearances until completion of the FDA process. We are currently in the process of preparing the PMA supplement submission for Impella CP, Impella 5.0 and Impella LD and we expect to file in the second quarter of fiscal 2016. We received FDA approval for Impella RP under a Humanitarian Device Exemption, or HDE, in January 2015. The Impella RP is the first percutaneous single access heart pump designed for right heart support to receive FDA approval. The Impella product portfolio, which includes the Impella 2.5, Impella CP, Impella RP, Impella LD and Impella 5.0, has supported over 25,000 patients in the U.S. Our Impella 2.5, Impella 5.0, Impella LD, Impella CP and Impella RP products also have CE Mark approval and Health Canada approval which allows us to market these devices in the European Union and Canada.

In July 2014, we acquired all of the issued shares of ECP Entwicklungsgellschaft mbH, or ECP, a German limited liability company, for $13.0 million in cash, with additional potential payments up to a maximum of $15.0 million based on the achievement of certain technical, regulatory and commercial milestones. ECP, based in Berlin, Germany, is engaged in research, development, prototyping and the pre-serial production of a percutaneous expandable catheter pump which increases blood circulation from the heart with an external drive shaft. In connection with our acquisition of ECP, ECP acquired all of the issued shares of AIS GmbH Aachen Innovative Solutions, or AIS, a German limited liability company, for $2.8 million in cash which was provided by us. AIS, based in Aachen, Germany, holds certain intellectual property useful to ECP’s business, and, prior to being acquired by ECP, had licensed such intellectual property to ECP.

Our revenues are primarily generated from our Impella line of products. Revenues from our non-Impella products, largely focused on the heart surgery suite, have been lower over the past several years as we have strategically shifted our sales and marketing efforts towards our Impella products and the cath lab. We expect that most of our product and service revenues in the near future will be from our Impella products.

Our Products

Impella 2.5

The Impella 2.5 catheter 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 their circulation. The Impella 2.5 catheter 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 flow to vital organs. The Impella 2.5 is introduced with normal interventional cardiology procedures and can pump up to 2.5 liters of blood per minute.

The Impella 2.5 product received 510(k) clearance in June 2008 from the FDA for partial circulatory support for up to six hours. In March 2015, we received PMA from the FDA for Impella 2.5 during elective and urgent high-risk PCI procedures. Impella 2.5 is the first hemodynamic support device to receive a PMA indication for use during high-risk PCI procedures, demonstrating its safety and effectiveness for this complex patient population. With this approval, the Impella 2.5 is a temporary (up to six hours) ventricular support device indicated for use during high-risk PCI performed in elective or urgent hemodynamically stable patients with severe coronary artery disease and depressed left ventricular ejection fraction, when a heart team, including a cardiac surgeon, has determined high-risk PCI is the appropriate therapeutic option. Use of the Impella 2.5 in these patients may prevent hemodynamic instability that may occur during planned temporary coronary occlusions and may reduce periprocedural and post-procedural adverse events. The product labeling allows for the clinical decision to leave Impella 2.5 in place beyond the intended duration of up to six hours due to unforeseen circumstances. Per our PMA approval, we will conduct a single-arm, post-approval study on the Impella 2.5, collecting data on high-risk PCI patients. The study will be a prospective, multi-center study comprised of 369 patients from 70 sites supported with the Impella 2.5 system. The Impella 2.5 device has CE mark approval in Europe for up to five days of use and is approved for use in over 40 countries.

A November 2011 update to the American College of Cardiology Foundation, or ACCF, / American Heart Association, or AHA, Task Force on Practice Guidelines and the Society for Cardiovascular Angiography and Interventions Guidelines for Percutaneous Coronary Intervention , for the first time, included Impella in both the emergent and prophylactic hemodynamic support settings. In addition, a December 2012 update to the AHA’s Recommendations for the Use of Mechanical Circulatory Support: Device Strategies and Patient Selection recommended Impella for use in mechanical circulatory support; a December 2012 update to the ACCF/AHA Guidelines for the Management of ST-Elevation Myocardial Infarction (STEMI) included Impella 2.5 for use in patients requiring urgent coronary artery bypass grafting with STEMI and in treatment of patients with cardiogenic shock complications after STEMI; and a January 2013 update to the International Society for Heart and Lung Transplantation Guidelines for Mechanical Circulatory Support included Impella for the first time for patients with multi-organ failure. In addition, Impella was included in a January 2013 update to the ACCF /AHA Task Force on Practice Guidelines for the Management of ST-Elevation Myocardial Infarction and a September 2014 AHA /the American College of Cardiology (ACC) Task Force on Practice Guidelines for the Management of Patients with Non-ST-Elevation Acute Coronary Syndromes .

In addition to the U.S. clinical trial data, the Impella 2.5 PMA submission included clinical and scientific supporting evidence from more than 215 publications, covering 1,638 Impella 2.5 patients and incorporated a medical device reporting (MDR) analysis from 13,981 Impella 2.5 patients. In addition to PROTECT I and PROTECT II, further data was provided in the submission from 637 high-risk patients enrolled in the U.S. Impella registry. The U.S. Impella registry is an ongoing multicenter, observational retrospective registry that includes 49 centers that collects data on the Impella 2.5, Impella 5.0 and Impella CP. The data collection from the registry includes Institutional Review Board, or IRB, approval, complete data monitoring and Clinical Events Committee adjudication. Additionally, the PMA analysis included hemodynamic science described in the literature and validated with a series of pre-clinical and clinical studies.

Impella CP

In September 2012, we announced that the Impella CP received 510(k) clearance from the FDA. The Impella CP provides blood flow of approximately one liter more per minute than the Impella 2.5 and is primarily used by either interventional cardiologists to support patients in the cath lab or by surgeons in the heart surgery suite. The Impella CP is indicated for up to six hours of partial circulatory support using an extracorporeal bypass control unit. It is also intended to be used to provide partial circulatory support, for up to six hours, during procedures not requiring cardiopulmonary bypass. The Impella CP received CE Mark approval to be marketed in the European Union in April 2012 and Health Canada approval to be marketed in Canada in June 2012.

We are currently working with the FDA on a PMA supplement for the Impella CP and we expect to file the application in the second quarter of fiscal 2016. We expect Impella CP to retain its 510(k) clearance until the FDA completes its review of the PMA supplement.

Impella 5.0 and Impella LD

The Impella 5.0 and Impella LD 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. The Impella 5.0 and Impella LD devices received 510(k) clearance in April 2009, for circulatory support for up to six hours and have CE Mark approval in Europe for up to ten days’ duration and are approved for use in over 40 countries.

The Impella 5.0 can be inserted into the left ventricle via femoral cut down or through the axillary artery. The Impella 5.0 pump goes through the ascending aorta, across the valve and into the left ventricle. The Impella LD is similar to the Impella 5.0 but is implanted directly through an aortic graft. The Impella 5.0 and Impella LD can pump up to five liters of blood per minute, providing full circulatory support.

We are currently working with the FDA on a PMA supplement for the Impella 5.0 and LD devices and we expect to file the application for these products in the second quarter of fiscal 2016. The Impella 5.0 and Impella LD will retain their 510(k) clearances until completion of the FDA process.

Impella RP

The Impella RP is a percutaneous catheter-based axial flow pump that is designed to allow greater than four liters of flow per minute and is intended to provide the flow and pressure needed to compensate for right side heart failure.

In November 2012, we announced that the Impella RP received U.S. investigational device exemption, or IDE, approval from the FDA for use in RECOVER RIGHT, a pivotal clinical study in the U.S. In March 2014, we completed enrollment of 30 patients at sites that present with signs of right side heart failure, require hemodynamic support, and are being treated in the catheterization lab or cardiac surgery suite. The study collected safety and effectiveness data on the percutaneous use of the Impella RP and was submitted to the FDA in connection with the HDE application towards the submission of an HDE. In January 2015, we received FDA approval for Impella RP under an HDE.

Impella RP is the first percutaneous single access heart pump designed for right heart support to receive FDA approval. An HDE is similar to a PMA application but is intended for patient populations of 4,000 or less per year in the U.S. and is subject to certain profit and use restrictions. The Impella RP is a percutaneous device 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 acute myocardial infarction, or AMI, or a failed heart transplant. An HDE requires demonstration of the safety and probable benefit of the product, which is a lower standard than is applied to a PMA. In order to receive an HDE, there must be no comparable devices approved under PMA that are available to treat the targeted population. An approved HDE authorizes sales of the device to any hospital after Institutional Review Board review and approval by the hospital. In April 2014, the Impella RP received CE Marking approval which allows for commercial sales of Impella RP in the EU and other countries that require a CE Marking approval for sales.

AB5000

We manufacture and sell the AB5000 Circulatory Support System for the temporary support of acute heart failure patients in profound shock, including patients suffering from cardiogenic shock after a heart attack, post-cardiotomy cardiogenic shock, or myocarditis. We believe the AB5000 is the only commercially available cardiac assist device that is approved by the FDA for all indications where heart recovery is the desired outcome, including patients who have undergone successful cardiac surgery and subsequently develop low cardiac output, or patients who suffer from acute cardiac disorders leading to hemodynamic instability. We expect revenues from the AB5000 to be a smaller part of our business in the future as we focus our efforts on the Impella suite of products.

Summary of Recent Financial Performance

For the three months ended June 30, 2015, we recognized net income of $8.9 million, or $0.21 per basic share and $0.20 per diluted share, compared to a net loss of $1.7 million, or $0.04 per basic and diluted share for the prior fiscal year. Our net income for the three months ended June 30, 2015 was driven primarily by higher Impella product revenue due to greater utilization of our Impella products in the U.S. and Europe.

Critical Accounting Policies and Estimates

There have been no significant changes in our critical accounting policies during the three months ended June 30, 2015, 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 ended March 31, 2015.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is included in “Note 1. Nature of Business and Basis of Preparation” to our condensed consolidated financial statements and are incorporated herein by reference.

Results of Operations

The following table sets forth certain condensed consolidated statements of operations data for the periods indicated as a percentage of total revenues:


	Three Months Ended June 30,
	2015			2014
Revenues:
Product		100.0	%		99.7	%
Funded research and development		—			0.3

Total revenues		100.0			100.0

Costs and expenses as a percentage of total revenues:
Cost of product revenue		14.8	%		19.8	%
Research and development		13.9			18.6
Selling, general and administrative		50.8			64.8

Total costs and expenses		79.5			103.2

Income (loss) from operations		20.5			(3.2	)
Other income		0.1			—

Income (loss) before income taxes		20.6			(3.2	)
Income tax provision		8.6			0.3

Net income as a percentage of total revenues		12.0	%		(3.5	)%

Three months ended June 30, 2015 compared with the three months ended June 30, 2014

Revenue

Our revenues are comprised of the following:


	Three Months Ended June 30,
	2015		2014
	(in $000’s)
Impella product revenue	$	68,805	$	44,975
Service and other revenue		4,153		3,280
Other products		468		405

Total product revenues		73,426		48,660
Funded research and development		6		151

Total revenues	$	73,432	$	48,811

Impella product revenue encompasses Impella 2.5, Impella CP, Impella 5.0, Impella LD and Impella RP product sales. Other product revenue includes AB5000 and product accessory revenue. Service and other revenue represents revenue earned on service maintenance contracts and preventive maintenance calls.

Total revenues for the three months ended June 30, 2015 increased by $24.6 million, or 50%, to $73.4 million from $48.8 million for the three months ended June 30, 2014. The increase in total revenue was primarily due to higher Impella revenue primarily as a result of greater utilization of our products in the U.S.

Impella product revenues for the three months ended June 30, 2015 increased by $23.8 million, or 53%, to $68.8 million from $45.0 million for the three months ended June 30, 2014. Most of the increase in Impella product revenue was from Impella CP and Impella 2.5 catheter sales in the U.S., as we focus on increasing utilization of our disposable catheter products through continued investment in our field organization and physician training programs. We expect Impella product revenues to continue to increase with our recent PMA approval in the U.S. as we increase utilization at existing customer sites, add new customer sites, continue our commercial launch of Impella CP, begin our controlled launch of Impella RP to the market and expand our efforts in Europe.

Service and other revenue for the three months ended June 30, 2015 increased by $0.9 million, or 27%, to $4.2 million from $3.3 million for the three months ended June 30, 2014. The increase in service revenue was primarily due to an increase in preventative maintenance service contracts, as we expand the use of our Impella AIC consoles to additional sites and place more consoles at existing higher using sites.

Other product revenues for the three months ended June 30, 2015 increased by $0.1 million, or 25%, to $0.5 million from $0.4 million for the three months ended June 30, 2014. The increase was due to increased AB5000 sales to our distributor in Japan. We expect that AB5000 revenue will continue to decline in fiscal 2016 as we focus our sales efforts in the surgical suite on Impella 5.0 and LD.

Costs and Expenses

Cost of Product Revenue

Cost of product revenue for the three months ended June 30, 2015 increased by $1.2 million, or 12%, to $10.9 million from $9.7 million for the three months ended June 30, 2014. Gross margin was 85% for the three months ended June 30, 2015 and 80% for the three months ended June 30, 2014. The increase in cost of product revenues was related to increased Impella demand and higher production volume and costs to support growing demand for our Impella products. Gross margin was impacted favorably by higher manufacturing production volume, fewer shipments of Impella AIC consoles and improved efficiencies in manufacturing production.

Research and Development Expenses

Research and development expenses for the three months ended June 30, 2015 increased by $1.1 million, or 12%, to $10.2 million from $9.1 million for the three months ended June 30, 2014. The increase in research and development expenses was primarily due to product development initiatives on our existing products and new technologies, increased clinical spending primarily related to our U.S. Impella registry and research activities from the acquisition of ECP in July 2014.

We expect research and development to increase in fiscal 2016 as we continue to pursue PMA supplements for Impella CP, Impella 5.0 and Impella LD products in the U.S. and clinical spending related to our U.S. Impella registry, and apply for regulatory approval for our Impella products in Japan. In addition, we expect to incur additional costs as we continue to focus on engineering initiatives to improve our existing products and develop new technologies.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended June 30, 2015 increased by $5.7 million, or 18%, to $37.3 million from $31.6 million for the three months ended June 30, 2014. The increase in selling, general and administrative expenses was primarily due to the hiring of additional U.S. field sales and clinical personnel, increased spending on marketing initiatives as we continue to educate physicians on the benefits of hemodynamic support after receiving PMA approval for Impella 2.5, higher stock-based compensation expense, higher excise taxes associated with the medical device tax in the U.S. and higher professional fees to support the growth of our business. These amounts were partially offset by lower legal expenses related to the Marketing and Labeling Investigation which was closed in June 2015. We expect to continue to incur legal expenses for the foreseeable future related to the FCA Investigation discussed in “Note 10. Commitments and Contingencies—Litigation,” to our condensed consolidated financial statements.

We expect to continue to increase our expenditures on sales and marketing activities, with particular investments in field sales and clinical personnel with cath lab expertise to drive recovery awareness for acute heart failure patients. We also plan to increase our marketing, service and training investments after PMA approval in the U.S. for Impella 2.5.

Income Tax Provision

We recorded an income tax provision of $6.3 million for the three months ended June 30, 2015, compared to $0.2 million for the three months ended June 30, 2014. We have provided income tax expense for the three months ended June 30, 2015, and 2014, using the expected effective tax rate for the entire year of 41.5% and (15.2)%, respectively. The increase in effective income tax rate for the three months ended June 30, 2015 was due to the fact that we were maintaining a full valuation allowance on most of our federal, state and certain foreign deferred tax assets prior to March 31, 2015, at which time the valuation allowance related to most of our deferred tax assets was reversed. As a result, the income tax provision for the three months ended June 30, 2015 was primarily due to the income taxes generated in the period and income taxes from the recognition of U.S and German non-operating losses included in our deferred tax assets. The income tax provision for the three months ended June 30, 2014 was primarily due to income taxes related to our deferred tax liability associated with tax deductible goodwill that is not amortized for U.S. GAAP purposes and we did not recognize U.S and German deferred tax assets or recognize a tax benefit from any losses incurred during this period did not produce a tax benefit.

Net Income

For the three months ended June 30, 2015, we recognized net income of $8.9 million, or $0.21 per basic share and $0.20 per diluted share, compared to a net loss of $1.7 million, or $0.04 per basic and diluted share for the three months ended June 30, 2014. Our net income for the three months ended June 30, 2015 was driven primarily to higher Impella product revenue due to greater utilization of our Impella products in the U.S. and Europe.

Liquidity and Capital Resources

At June 30, 2015, our total cash, cash equivalents, and short and long-term marketable securities totaled $156.4 million, an increase of $10.4 million compared to $146.0 million at March 31, 2015. The increase in our cash, cash equivalents, and short and long-term marketable securities was due primarily to positive cash flows from operations in the three months ended June 30, 2015 and proceeds from stock option exercises.

Following is a summary of our cash flow activities:


	Three Months Ended June 30,
	2015		2014
Net cash provided by operating activities	$	10,914	$	3,190
Net cash used for investing activities		5,739		10,826
Net cash provided by (used for) financing activities		1,210		(193	)
Effect of exchange rate changes on cash		167		1

Net increase in cash and cash equivalents	$	18,030	$	13,824

Cash Provided by Operating Activities

For the three months ended June 30, 2015, cash provided by operating activities consisted of net income of $8.9 million, adjustments for non-cash items of $11.6 million and cash used in working capital of $9.5 million. The increase in net income was primarily due to higher Impella product revenues from increased utilization of our Impella products in the U.S. and Europe. Adjustments for non-cash items primarily consisted of $4.8 million of stock-based compensation expense, $0.7 million of depreciation and amortization of long-lived assets, $0.3 million of write-downs of inventory, a $5.8 million change in deferred tax provision and a $0.2 million change in fair value of contingent consideration. The decrease in cash from changes in working capital included a $2.5 million increase in accounts receivable associated with our higher revenues, a $4.5 million increase in inventory as we build up our inventory safety stock to support growing demand for our Impella products and $3.8 million decrease in accounts payable and accrued expenses. These amounts were partially offset by an increase in deferred revenue of $0.8 million.

For the three months ended June 30, 2014, cash provided by operating activities consisted of net loss of $1.7 million, adjustments for non-cash items of $5.4 million and cash used in working capital of $0.5 million. Adjustments for non-cash items primarily consisted of $4.3 million of stock-based compensation expense, $0.6 million of depreciation and amortization of long-lived assets, $0.2 million of write-downs of inventory, and a $0.2 million change in deferred tax provision. The decrease in cash from changes in working capital included a $1.5 million increase in accounts receivable associated with our higher revenues and a $2.0 million for changes in accounts payable and accrued expenses. These amounts were partially offset by an increase in deferred revenue of $0.4 million.

Cash Used in Investing Activities

For the three months ended June 30, 2015, net cash provided by investing activities included $7.6 million in maturities (net of purchases) of marketable securities, partially offset by $1.9 million for the purchase of property and equipment mostly related to expansion of manufacturing capacity in Danvers, Massachusetts and Aachen, Germany.

For the three months ended June 30, 2014, net cash used for investing activities included $11.2 million in net proceeds from the sale and maturity of marketable securities (net of purchases) and $0.4 million for the purchase of property and equipment mostly related to expansion of manufacturing capacity in Aachen.

Capital expenditures for fiscal 2016 are estimated to range from $15.0 to $20.0 million, and are expected to be for manufacturing capacity expansions in both our Danvers, Massachusetts and Aachen, Germany facilities, leasehold improvements associated with build-out of additional rental office space and software development projects.

Cash Provided by Financing Activities

For the three months ended June 30, 2015, net cash provided by financing activities included $4.6 million in proceeds from the exercise of stock options, partially offset by $3.5 million in payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards.

For the three months ended June 30, 2014, net cash provided by financing activities included $0.8 million in proceeds from the exercise of stock options. This amount was offset by $1.0 million in payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards.

Operating Capital and Liquidity Requirements

We believe that our revenue from product sales together with existing resources will be sufficient to fund our operations for at least the next twelve months, exclusive of activities involving any future acquisitions of products or companies that complement or augment our existing line of products.

Our primary liquidity requirements are to fund the expansion of our commercial infrastructure in the U.S., increase our Impella manufacturing capacity, expand our office space in Danvers, Massachusetts and Aachen, Germany, increase our inventory levels in order to meet increasing customer demand for our Impella products, fund new product development, prepare for commercial launches of Impella in new markets in the future, such as Japan, increased clinical spending associated with our U.S. Impella registry as well as post approval study on Impella 2.5 related to our PMA approval, Impella RP post approval study, costs of legal fees related to the FCA Investigation and to provide for general working capital needs. Through June 30, 2015, we have funded our operations principally from product sales and through 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 include our ability to penetrate the market for our products, maintain or reduce the length of the selling cycle for our products, capital expenditure requirements, invest in collaborative arrangements with other partners, and collect cash from customers after our products are sold. We also expect to continue to incur legal expenses for the foreseeable future related to the FCA Investigation and our response to requests for information. We continue to review our long-term cash needs on a regular basis. At June 30, 2015, we had no long-term debt outstanding.

Marketable securities at June 30, 2015 consisted of $116.0 million held in funds that invest in U.S. Treasury and government-backed securities. We are not a party to any interest rate swaps, currency hedges or derivative contracts of any type and have no exposure to commercial paper or auction rate securities markets.

Cash and cash equivalents held by our foreign subsidiaries totaled $5.5 million and $3.6 million at June 30, 2015 and March 31, 2015, respectively. Our operating income outside the U.S. is deemed to be permanently reinvested in foreign jurisdictions. We do not intend or currently foresee a need to repatriate cash and cash equivalents held by our foreign subsidiaries. If these funds are needed in the U.S., we believe that the potential U.S. tax impact to repatriate these funds would be immaterial.

ITEM 3:

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Primary Market Risk Exposures

Our cash, cash equivalents and marketable securities are subject to interest rate risk and will fall in value if market interest rates increase. Marketable securities at June 30, 2015 consist of $116.0 million held in funds that invest in U.S. Treasury and government-backed securities. If market interest rates were to increase immediately and uniformly by 10 percent from levels at June 30, 2015, we believe the decline in fair market value of our investment portfolio would be immaterial.

Currency Exchange Rates

We have foreign currency exposure to exchange rate fluctuations and particularly with respect to the euro, British pound sterling and Japanese yen. Therefore, our investment in our subsidiaries is sensitive to fluctuations in currency exchange rates. The effect of a change in currency exchange rates on our net investment in international subsidiaries is reflected in the accumulated other comprehensive income (loss) component of stockholders’ equity. If rates of exchange for the euro, British pound and Japanese yen were to have depreciated immediately and uniformly by 10% relative to the U.S. dollar from levels at June 30, 2015, the result would have been a reduction of stockholders’ equity of approximately $4.8 million.

Fair Value of Financial Instruments

At June 30, 2015, our financial instruments consist primarily of cash and cash equivalents, short-term and long-term marketable securities, accounts receivable, accounts payable and contingent consideration. The estimated fair values of the financial instruments have been determined by us using available market information and appropriate valuation techniques. Considerable judgment is required, however, to interpret market data to develop the estimates of fair value. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of June 30, 2015. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2015, these disclosure controls and procedures are effective to provide reasonable assurance that material information required to be disclosed by us, including our consolidated subsidiaries, in reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Changes in Internal Control over Financial Reporting

During the first quarter of our fiscal year ending March 31, 2016, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings

We are from time to time involved in various legal actions, the outcomes of which are not within our complete control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, which, if granted, would require significant expenditures. We record a liability in our condensed consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. We review these estimates each accounting period as additional information is known and adjust the loss provision when appropriate. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in the condensed consolidated financial statements. Material legal proceedings are discussed in “Note 10. Commitments and Contingencies—Litigation” to our condensed consolidated financial statements and are incorporated herein by reference.

Item 1A.

Risk Factors

Investing in our common stock involves a high degree of risk. In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2015, which could materially affect our business, financial condition or future results. As of the date of this Report there has been no material change in any of the risk factors described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2015.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

Item 3.

Defaults Upon Senior Securities

None

Item 4.

Mine Safety Disclosures

Not applicable.

Item 5.

Other Information

None

Item 6.

Exhibits

Exhibit

No.

Description

Filed with

This

Form 10-Q

Incorporated by Reference

Form

Filing Date

Exhibit
No.

3.1

Restated Certificate of Incorporation.

S-3

September 29, 1997

3.1

3.2

Restated By-Laws, as amended

10-K

May 27, 2004 (File
No. 001-09585)

3.2

3.3

Certificate of Designations of Series A Junior Participating Preferred Stock.

S-3

September 29, 1997

3.3

3.4

Amendment to the Company’s Restated Certificate of Incorporation to increase the authorized shares of common stock from 25,000,000 to 100,000,000.

8-K

March 21, 2007 (File
No. 001-09585)

3.4

4.1

Specimen Certificate of common stock.

S-1

June 5, 1987

4.1

10.1

Amended Lease dated as of April 30, 2015, between Abiomed, Inc. and Leo C. Thibeault, Jr., Trustee of the Thibeault Nominee Trust.

10-K

May 28, 2015 (File
No. 001-09585)

10.29

10.2

Offer Letter with Michael J. Tomsicek dated May 26, 2015

10.3

Retirement Agreement with Robert L. Bowen dated May 26, 2015.

10.4

Form of TSR Award (Performance and Time Based RSU)

31.1

Principal Executive Officer Certification pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Principal Financial Officer Certification pursuant to Securities Exchange Act Rule 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Principal Executive Officer and Principal Financial Officer Certifications pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101

The following financial information from the ABIOMED, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets as of June 30, 2015 and March 31, 2015; (ii) Condensed Consolidated Statements of Operations for the three months ended June 30, 2015 and 2014; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2015 and 2014; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended June 30, 2015 and 2014; and (v) Notes to Condensed Consolidated Financial Statements.

ABIOMED, INC. AND SUBSIDIARIES

PART II. OTHER INFORMATION

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

Exhibit 10.2

May 26, 2015

Mr. Michael Tomsicek

Dear Mike:

ABIOMED, Inc. is pleased to extend to you this offer of employment, subject to Board of Directors approval, in the position of Vice President and Chief Financial Officer. We are excited to have you join our team and know that you will play a key role in building the strongest team in the industry.

This letter, along with any enclosures, contains our complete offer of employment to you. All of the compensation described in this letter will be subject to applicable withholdings. This offer is contingent upon successful verification of references as well as the successful completion of a Company-paid initial-employment drug screen and background check.

Your semi-monthly salary will be $14,583.33, annualized at a rate of $350,000. Your performance and salary will be reviewed annually and your salary may be adjusted in accordance with normal business practices based on your performance as well as on other factors such as the Company’s performance. Your vacation will accrue daily at a rate equivalent to 4 weeks per year.

You will be eligible for an annual bonus with an annual target pay-out of $210,000 for outstanding performance. The amount of such bonus, if any, will be determined by the Compensation Committee of our Board of Directors. Your bonus will be based on achievement of personal and Company objectives, provided you are an active employee in good standing at the time payment is made. Because you will be joining the Company mid-way through our fiscal year this amount will be pro-rated for FY’2016. The Company will also provide you with a formal Change of Control Agreement that will provide you with salary and benefits continuation for a period of two years in the event that your employment is terminated as a result of a change in control as defined in the agreement.

As an incentive for you to participate in the Company’s long-term growth, you will be eligible to receive (i) options to purchase 25,000 shares of the Company’s common stock (the “ Options ”), and (ii) 25,000 restricted stock units with time-based vesting (the “ Time-Based RSUs ) (collectively, the “ Equity Awards ”). The Options will be granted at the closing market price on the date of grant. The Options will vest over four years according to the following schedule: 25% on each of the first four anniversaries of the date of grant as long as you remain in the employ of the Company. The Time-Based RSUs will vest over three years, 1/3 on each of the first three anniversaries of the date of grant as long as you remain in the employ of the Company. The Equity Awards will be granted in accordance with the terms and conditions of the ABIOMED Stock Incentive Plan and are subject to approval by ABIOMED’s Compensation Committee of the Board of Directors.

While you are employed by ABIOMED, you will be eligible to receive benefits in accordance with the terms of the benefit plans that the Company may offer from time to time, subject to plan terms and generally applicable ABIOMED policies. This program presently includes medical and dental insurance, vacation, holidays, sick time, 401(k) savings plan, Employee Stock Purchase Plan and others. You will receive more detailed information regarding ABIOMED benefits and policies on or before your first day of employment. Where a particular benefit is subject to a formal plan (for example, medical insurance, 401(k)), eligibility to participate in the plan and to receive any particular benefit is governed solely by the applicable plan document. Should you have any questions about the Company’s benefits, please feel free to request a copy of any applicable plan document and/or make further inquiry. The Company reserves the right on a prospective basis to modify, change or eliminate its compensation, bonus or benefit programs in its sole discretion.

In order to protect ABIOMED’S substantial investment of time and money in the creation and maintaining of its trade secrets and other confidential and proprietary information, as well as its good-will with its clients, customers, suppliers and vendors, all employees are required to sign our standard employment, nondisclosure/non-compete agreement. The terms and conditions of this agreement will apply, regardless of any change in the nature of your duties, compensation or employment with any entity related to ABIOMED.

Also, as we have explained to you, just as ABIOMED regards the protection of our confidential information as a matter of great importance, we also respect that you may have an obligation to your present and/or prior employers to safeguard the confidential information of those companies. ABIOMED respects these obligations, and expects you to honor them as well. To that end, we expect that you have not taken any documents or other confidential information from your employer. Further, we want to make it perfectly clear you should not bring with you to ABIOMED, or use in the performance of your responsibilities for our Company, any proprietary business or technical information, materials or documents of a former employer.

You also must complete an Employment Eligibility Verification Form, and submit (within 3 business days of employment) an original document establishing identity and employment eligibility.

While we obviously are hopeful and confident that our relationship will be mutually rewarding, satisfactory and sustaining, this letter shall not be construed as an agreement, either express or implied, to employ you for any stated term, and shall in no way alter ABIOMED policy under which both you and the Company remain free to end the employment relationship at any time and for any reason. Similarly, nothing in this letter shall be construed as an agreement, either express or implied, to pay you any compensation of any kind, or grant you any benefit beyond the end of your employment with the Company. Also, this letter constitutes our entire offer regarding the terms and conditions of your employment by ABIOMED and it supersedes any prior agreements, or other promises or statements (whether oral or written) regarding the offered terms of employment.

-2-

Once you have had an opportunity to review the above information, please confirm your acceptance of this offer, by signing the original of this letter and returning one copy of this letter to Stephen McEvoy by email at smcevoy@abiomed.com.

Mike, we are very enthusiastic about your joining ABIOMED and look forward to a mutually rewarding working relationship. Should you have any questions, please feel free to contact me at any time. We look forward to your acceptance of this offer!

Sincerely,

/s/ Michael R. Minogue

Michael R. Minogue

Chairman, President and CEO

Agreed and Accepted:

I accept the above described position and terms of employment. My start date will be July 15, 2015.


/s/ Michael Tomsicek				5-22-2015
Michael Tomsicek				Date

-3-

Exhibit 10.3

May 26, 2015

RETIREMENT/CONSULTING AGREEMENT AND RELEASE

Mr. Robert L. Bowen

Dear Bob:

As we have discussed, your employment with ABIOMED, Inc. ¹ (the “ Company ”) will terminate, effective as of the Separation Date (as defined below), by reason of your retirement. The purpose of this letter (this “ Agreement ”) is to confirm the agreement between you and the Company concerning your termination of employment with the Company and transition to a consulting role with the Company in consideration of the promises contained in this Agreement.

1. Separation Date and Transition Period .

(a) From the date of this Agreement until July 31, 2015 (the “ Separation Date ”), you will continue to be employed by the Company. The Company will continue to pay you your salary, at your current base rate of pay and in accordance with the regular payroll practices of the Company through the Separation Date. Your present eligibility to participate in the Company’s benefits plans shall continue unchanged until the Separation Date, and you will continue to accrue vacation time until the Separation Date.

(b) Effective July 15, 2015, you will no longer serve as and will resign from your positions as Chief Financial Officer and Treasurer of the Company. From July 15, 2015 to the Separation Date (the “ Transition Period ”), you will perform such transitional duties and functions as are expressly assigned to you by the Company’s Chief Executive Officer and/or Board of Directors (the “ Board ”), and will perform those duties and functions, and generally fulfill your obligations, subject to such direction and limitations as the Chief Executive Officer, the Board or their delegates may determine. You will continue to be provided with office space and administrative support consistent with your role during the Transition Period.

(c) The Company may terminate your employment at any time during or prior to the Separation Date upon notice to you (and upon which occurrence, the “Separation

Except for the obligations set forth in Section 3 hereof, which shall be the sole obligation of ABIOMED, Inc., whenever the terms the Company or ABIOMED, Inc. are used in this document, they shall be deemed to include ABIOMED, Inc., and any other related entities including any divisions, affiliates and subsidiaries, and its and their respective past, present and future officers, directors, shareholders, employee benefit plans, employees, agents, representatives, successors and assigns, and all others connected with any of them, both individually and in their official capacities.

Date” will be the date of such earlier termination); provided , that in all events you will still be entitled to payment of your salary through the Separation Date as described in Section 1 above.

2. Retirement . Your employment with the Company will terminate on the Separation Date by reason of your retirement. You acknowledge that from and after the Separation Date, except as otherwise expressly agreed to by the Company in connection with your consulting role (as described below), you will have no authority to, and shall not, take any action that binds or purports to bind the Company nor will you represent yourself as an employee or agent of the Company. For purposes of each of the Company’s employee benefit plans, the termination of your employment with the Company will be treated as occurring, and you will be treated as having separated from the service (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended from the Company as of the Separation Date.

3. Retirement Benefits . In consideration for your undertakings set forth herein, including the provision of transition and consulting services to the Company and your obligation to execute a post-employment waiver and general release of claims in the form attached hereto as Exhibit A (the “ Release ”), subject to the approval of the Compensation Committee of the Board of Directors, you and the Company hereby agree as follows:

(a) As of the Separation Date, you and the Company acknowledge that you hold (a) options to purchase 147,500 shares of Company common stock granted pursuant to the Company’s 2008 Stock Incentive Plan (the “ Equity Plan ”), of which 15,000 options remain unvested as of the Separation Date, and (b) 25,724 restricted stock units granted pursuant to the Equity Plan, which restricted stock units are unvested as of the Separation Date (“ RSUs ”).

(b) All options and RSUs that are unvested as of the Separation Date and that would by their terms be eligible to vest during the period beginning on the Separation Date and ending on July 31, 2017 (the “ Separation Vesting Date ”) if your employment with the Company had continued through the Separation Vesting Date shall remain outstanding and eligible to vest in accordance with their terms (other than the requirement of continued employment), subject to the terms of the Equity Plan and the award agreements under which such equity awards were initially granted (the “ Equity Benefits ”). Any RSUs that vest as a result of this Section 3(b) shall be settled in shares of common stock of the Company not later than thirty (30) days following the date on which they vest. As of the Separation Vesting Date, all then unvested options and RSUs shall be immediately forfeited.

(c) All options that are vested as of the Separation Date and all options that vest following the Separation Date pursuant to Section 3(b) shall remain exercisable until the earlier of the Separation Vesting Date or the expiration date of such options.

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(d) Except for (i) the Equity Benefits, (ii) earned but unpaid regular wages earned through the Separation Date (which shall be paid to you no later than five (5) business days after the Separation Date), and (iii) accrued but unused vacation (which shall be paid to you in accordance with applicable law), you are not and shall not in the future be entitled to any other compensation or benefits from the Company including, without limitation, other wages, commissions, bonuses, incentives, vacation pay, holiday pay or any other form of compensation or benefit. You will receive the payments described in clauses (ii) and (iii) regardless of whether or not you elect to sign this Agreement and/or the Release.

(e) Upon your making a timely election under the provisions of 29 U.S.C. § 1161, as amended (“COBRA”), ABIOMED will pay the standard employer portion of your medical and dental insurance premiums for eighteen (18) months following the Separation Date or until you obtain alternative coverage, whichever is earlier, provided that you timely pay your regular employee contribution toward your medical and dental insurance premiums as required by ABIOMED or its COBRA administrator. ABIOMED’s obligations under this subsection are contingent on your making a timely COBRA election. Additionally, ABIOMED shall only be required to continue and contribute to your medical and dental insurance under this subsection to the same extent that such insurance is provided to persons employed by ABIOMED. The “qualifying event” under COBRA shall be deemed to have commenced on the Separation Date.

(f) Except as provided above, your participation in all employee benefit plans and programs of the Company shall end as of the Separation Date, in accordance with the terms of those plans and programs. You will not continue to earn vacation or any other paid time off after the Separation Date.

4. Consulting Role . Beginning on the Separation Date, you will make yourself reasonably available to the Company by phone and, if requested by the Company, two days per quarter in person to advise and assist with finance matters, including but not limited to the Company’s transition to a new Chief Financial Officer.

5. Confidentiality and Other Related Obligations . You expressly acknowledge and agree to the following:

(a) You hereby reaffirm your obligations under Sections 5 – 17 of the ABIOMED, Inc. Nondisclosure and Non Competition Agreement (the “ NCA ”) previously signed by you, which terms are incorporated herein and attached hereto as Exhibit B , and that you shall sign the ABIOMED, Inc. “Acknowledgment Upon Termination of Employment” attached to the NCA as Appendix B .

(b) On or before the Separation Date you shall return to the Company all Company property (including without limitation, keys, computer equipment, computer discs and

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software, Company files and documents, Company credit cards, etc.) and documents and any copies thereof (including, without limitation, financial plans, management reports, suppliers and customer address lists, customer lists, and other similar documents and information and whether in hardcopy, on electronic media, or otherwise), and that you will abide by any and all common law and/or statutory obligations relating to protection and non-disclosure of the Company’s trade secrets and confidential information.

(c) Subject to Section 6(f), all information relating in any way to this Agreement, including the terms and amount of financial consideration provided for in this Agreement, shall be held confidential by you and shall not be publicized or disclosed to any person or entity (other than an immediate family member, legal counsel or financial advisor, provided that any such individual to whom disclosure is made agrees to be bound by these confidentiality obligations), except as mandated by law.

(d) Subject to Section 6(f), you will not make any statements that are professionally or personally disparaging about, or adverse to, the interests of the Company (including its officers, directors and employees) including, but not limited to, any statements that disparage any person, product, service, finances, financial condition, capability or any other aspect of the business of the Company, and that you will not engage in any conduct which is intended to harm professionally or personally the reputation of the Company (including its officers, directors and employees).

(e) Your breach of any covenant in this Section 5 or Section 6 below or your ongoing obligations under the NCA shall constitute a material breach of this Agreement and shall relieve the Company of any further obligations hereunder and, in addition to any other legal or equitable remedy available to the Company, shall entitle the Company to stop providing and/or recover any Equity Benefits payable or paid to you (or on your behalf) pursuant to Section 3 of this Agreement, including, for the avoidance of doubt, any proceeds from the sale of shares of Company stock that vest or that are acquired as a result of Section 3.

6. Release of Claims .

(a) In consideration for the payments and additional benefits to be paid by the Company hereunder, to which you are not otherwise entitled, you hereby acknowledge and agree that you are waiving your right to assert any Claim (as defined below) against the Company arising from acts or omissions that occurred on or before the date you execute this Agreement. Please note the definition of the Company contained in footnote 1 of this Agreement.

(b) Your waiver and release is intended to bar any form of legal claim, lawsuit, charge, complaint or any other form of action (jointly referred to as “ Claims ”) against the Company seeking money or any other form of relief, including but not limited to equitable relief (whether declaratory, injunctive or otherwise), damages or any other form of monetary recovery (including but not limited to back pay, front pay, compensatory damages, emotional

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distress damages, punitive damages, attorneys’ fees and any other costs). You understand that there could be unknown or unanticipated Claims resulting from your employment or other associations with the Company and the termination of your employment, and you agree that such Claims are included in this waiver and release.

(c) Without limiting the generality of the previous paragraph, you specifically waive and release the Company from any Claims, including, without limitation:

(i) Claims under any statute, ordinance, regulation, executive order, common law, constitution and/or other source of law of any state, country and/or locality (collectively and individually referred to as “ Law ”), including but not limited to the United States, the Commonwealth of Massachusetts, and any other state or locality where you worked for the Company.

(ii) Claims under any Law concerning discrimination, harassment or fair employment practices, including but not limited to the Massachusetts Anti-Discrimination and Anti-Harassment Law (Massachusetts General Laws Chapter 151B), Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.), and the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.);

(iii) Claims under any Law relating to wages, hours leaves of absences or any other terms and conditions of employment, including but not limited to the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601 et seq.), the Massachusetts Payment of Wages Law (Massachusetts General Laws Chapter 149, §§ 148, 150), Massachusetts General Laws Chapter 149 in its entirety, and Massachusetts General Laws Chapter 151 in its entirety (including but not limited to the minimum wage and overtime provisions), each as amended from time to time. You specifically acknowledge that you are waiving any Claims for unpaid wages under these and other Laws;

(iv) Claims under any state, federal or local common law theory;

(v) Claims arising under the Company’s policies or benefit plans; and

(vi) Claims arising under any other Law or constitution.

(d) Notwithstanding the foregoing, this Section shall not release the Company from any obligation expressly set forth in this Agreement. You acknowledge and agree that, but for providing this waiver and release and your agreement to the terms and conditions contained herein, you would not be receiving the Equity Benefits provided for in this Agreement.

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(e) You acknowledge that you are signing this Agreement voluntarily and with a full understanding of its terms, and that you have had a sufficient opportunity before signing this Agreement to consider its terms and, if you choose to do so, to consult with any person to whom reference is made in Section 5(c) above.

(f) Also, consistent with the provisions of federal laws prohibiting discrimination (the “ Federal Discrimination Laws ”), nothing in the general waiver and release set forth in this Section 6 shall be deemed to prohibit you from challenging the validity of this release under the Federal Discrimination Laws or from filing a charge or complaint of age or other employment related discrimination with the Equal Employment Opportunity Commission or any comparable state or local agency (collectively, “ EEOC ”), or from participating in any investigation or proceeding conducted by the EEOC. However, the release in this Section 6 does prohibit you from seeking or receiving monetary damages or other individual-specific relief in connection with any such charge or complaint of age or other employment-related discrimination filed by you or by anyone else on your behalf, and you hereby waive your right to recover any such damages or relief.

(g) You agree that, if you elect to sign the Release, you must do so by the later of (i) the date that is twenty-one (21) days following the date hereof and (ii) the date that is seven (7) days following the Separation Date (and in no event before the Separation Date). You further agree that a signed and unrevoked Release is an express condition to your receipt and retention of Equity Benefits.

7. Entire Agreement/Choice of Law/Enforceability/Jury Waiver/Successors and Assigns .

(a) Except as otherwise expressly provided in this Agreement, this Agreement (including without limitation the Exhibits hereto) supersedes any and all other prior oral and/or written agreements and sets forth the entire agreement between you and the Company. No variations or modifications hereof shall be deemed valid unless reduced to writing and signed by the parties hereto.

(b) This Agreement shall be governed by the law of the Commonwealth of Massachusetts, without giving effect to conflict of law principles that would result in the application of the laws of another jurisdiction.

(d) By executing this Agreement, you are acknowledging (i) that you have been afforded sufficient time to understand the terms and effects of this Agreement and to consult with legal counsel, (ii) that your agreements and obligations hereunder are made voluntarily, knowingly and without duress, and (iii) that neither the Company nor its agents or representatives have made any representations inconsistent with the provisions of this Agreement.

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If you agree to the terms of this Agreement, please sign and return the enclosed copy of this Agreement by no later than June 1, 2015.


Very truly yours,

ABIOMED, Inc.		Accepted and Agreed To:

By:	/s/ Michael Minogue	/s/ Robert Bowen

	Michael Minogue Chief Executive Officer	Robert Bowen

Dated:	May 26, 2015	Dated:	May 26, 2015

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EXHIBIT A

POST-EMPLOYMENT WAIVER AND RELEASE OF CLAIMS

July , 2015

In consideration for the payments and additional benefits to be paid by the Company under the Retirement/Consulting Agreement and Release by and between me and the Company, dated as of the date hereof (the “ Agreement ”), to which I am not otherwise entitled, I hereby acknowledge and agree that I am waiving my right to assert any Claim (as defined below) against the Company arising from acts or omissions that occurred on or before the date I execute this Post-Employment Waiver and Release of Claims (this “ Release ”). I understand that capitalized terms not defined herein shall have the respective meanings that apply to them in the Agreement (including without limitation the definition of the Company contained in footnote 1 of the Agreement).

My waiver and release is intended to bar any form of legal claim, lawsuit, charge, complaint or any other form of action (jointly referred to as “ Claims ”) against the Company seeking money or any other form of relief, including but not limited to equitable relief (whether declaratory, injunctive or otherwise), damages or any other form of monetary recovery (including but not limited to back pay, front pay, compensatory damages, emotional distress damages, punitive damages, attorneys’ fees and any other costs). I understand that there could be unknown or unanticipated Claims resulting from my employment or other associations with the Company and the termination of my employment, and I agree that such Claims are included in this waiver and release.

Without limiting the generality of the previous paragraph, I specifically waive and release the Company from any Claims, including, without limitation:

(a) Claims under any statute, ordinance, regulation, executive order, common law, constitution and/or other source of law of any state, country and/or locality (collectively and individually referred to as “ Law ”), including but not limited to the United States, the Commonwealth of Massachusetts, and any other state or locality where I worked for the Company;

(b) Claims under any Law concerning discrimination, harassment or fair employment practices, including but not limited to the Massachusetts Anti-Discrimination and Anti-Harassment Law (Massachusetts General Laws Chapter 151B), the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.), Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e et seq.), and the Americans with Disabilities Act (42 U.S.C. § 12101 et seq.);

(c) Claims under any Law relating to wages, hours leaves of absences or any other terms and conditions of employment, including but not limited to the Family and Medical Leave Act of 1993 (29 U.S.C. § 2601 et seq.), the Massachusetts Payment of Wages Law

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(Massachusetts General Laws Chapter 149, §§ 148, 150), Massachusetts General Laws Chapter 149 in its entirety, and Massachusetts General Laws Chapter 151 in its entirety (including but not limited to the minimum wage and overtime provisions), each as amended from time to time. I specifically acknowledge that I am waiving any Claims for unpaid wages under these and other Laws;

(d) Claims under any state, federal or local common law theory;

(e) Claims arising under the Company’s policies or benefit plans; and

(f) Claims arising under any other Law or constitution.

Notwithstanding the foregoing, this Release shall not release the Company from any obligation expressly set forth in the Agreement. I acknowledge and agree that, but for providing this waiver and release and my agreement to the terms and conditions contained herein, I would not be receiving the Equity Benefits provided for in the Agreement.

Because I am at least forty (40) years of age, I have specific rights under the federal Age Discrimination in Employment Act (“ ADEA ”) and Older Workers Benefits Protection Act (“ OWBPA ”). This Release is intended to release any Claim I may have against the Company under the ADEA, OWBPA and other Laws. Notwithstanding anything to the contrary in this Release, it does not cover rights or Claims under the ADEA that arise from acts or omissions that occur after the date I sign this Release.

Also, consistent with the provisions of the OWBPA and other federal laws prohibiting discrimination (the “ Federal Discrimination Laws ”), nothing in this Release shall be deemed to prohibit me from challenging the validity of this Release under the Federal Discrimination Laws or from filing a charge or complaint of age or other employment related discrimination with the Equal Employment Opportunity Commission or any comparable state or local agency (collectively, “ EEOC ”), or from participating in any investigation or proceeding conducted by the EEOC. However, I acknowledge and agree that this Release does prohibit me from seeking or receiving monetary damages or other individual-specific relief in connection with any such charge or complaint of age or other employment-related discrimination filed by me or by anyone else on my behalf, and I hereby waive my right to recover any such damages or relief.

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I understand that it is the Company’s desire and intent to make certain that I fully understand the provisions and effects of this Release. To that end, I acknowledge that the Company hereby advises me in writing to consult with legal counsel prior to signing this Release for the purpose of reviewing the terms of this Release. Also, because I am at least age 40, and consistent with the provisions of the OWBPA, I acknowledge that the Company is providing me with at least twenty-one (21) days to consider and accept the terms of this Release by signing below and returning it to ABIOMED, Inc., c/o Stephen McEvoy, 22 Cherry Hill Drive, Danvers, MA 01923 (provided, however, that I may not sign this Release on or before the Separation Date). I acknowledge that I am signing this Release voluntarily and with a full understanding of its terms. I agree that, if I elect to sign this Release, I must do so by the later of (i) the date that is twenty-one (21) days following the date hereof and (ii) the date that is seven (7) days following the Separation Date (and in no event before the Separation Date).

In addition, I may rescind my assent to this Release if, within seven (7) days after I sign this Release, I deliver a notice of rescission to Stephen McEvoy at the Company. To be effective, such rescission must be hand delivered or postmarked within the seven (7) day period and sent by certified mail, return receipt requested, to Stephen McEvoy at the Company at the above referenced address. If I do not rescind my assent to this Release, then, on the eighth (8th) day following the date that I signed it, this Release will take effect as a legally binding agreement between me and the Company on the basis set forth herein. If I rescind my assent to this Release, I shall not be entitled to any of the Equity Benefits provided in Section 3 of the Agreement.


Accepted and agreed:

Signature:
		Robert L. Bowen

Date:

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EXHIBIT B

ABIOMED, Inc.

NONDISCLOSURE AND NON COMPETITION AGREEMENT

AGREEMENT made as of the day of 2014, by and between ABIOMED, Inc., a Delaware Corporation with offices at 22 Cherry Hill Park, Danvers, Massachusetts (“ABIOMED”), and (the “Employee”) of (Address). For purposes of this Agreement, unless the context otherwise requires, the term ABIOMED, shall include ABIOMED and each of its subsidiaries.

RECITALS

The Employee desires to be employed by ABIOMED and ABIOMED desires to employ the Employee in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises contained herein, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

Employment . The Employee shall initially be employed by ABIOMED as their . ABIOMED reserves the right, in its sole discretion, to change the Employee’s title and responsibilities at any time.

Compensation . The Employee’s semi-monthly rate shall be $ , subject to periodic review and adjustment by ABIOMED in its sole discretion. Payment of any bonuses will be at the sole discretion of ABIOMED. ABIOMED maintains certain benefit plans and programs for its employees. The Employee’s eligibility for and participation in these plans are subject to the terms and conditions of each plan. ABIOMED reserves the right to modify or terminate any plan or program at any time.

Loyalty and Best Efforts . The Employee agrees that he/she shall be a full-time employee, devoting his/her entire time, undivided loyalty and best efforts to the business of ABIOMED. The Employee shall not during the term of his/her employment be engaged in any other occupation, professional or business activity. As a representative of ABIOMED, the Employee further agrees to always conduct himself in accordance with the highest ethical and moral standards during both working and non-working hours. Attached to this Agreement as Appendix A is ABIOMED’s “Conflicts of Interest Policy”. By executing this Agreement, the Employee represents and warrants that he/she has reviewed carefully the Policy and Guidelines and agrees to abide by the Policy and Guidelines, as they may be updated and modified by ABIOMED from time to time.

Employment-At-Will. The Employee agrees that his/her employment with ABIOMED is on an “at-will” basis, which means that either ABIOMED or the Employee may terminate the Employee’s employment at any time, for any or no reason, with or without notice. Nothing in this Agreement shall be construed to the contrary.

Protection of Proprietary Information .

ABIOMED has developed or acquired materials and information (whether or not reduced to writing, patentable or protectable by copyright) relating to ABIOMED’s operating procedures, products, methods, service techniques, engineering and manufacturing data machines, devices, apparatus, “know-how”, formulae, software, processes, plans, designs, specifications, trade secrets, company data regarding costs, profits, markets and sales, customer lists, plans for present and future research, development and marketing, and other proprietary information not available to the public (collectively “Proprietary Information”) which gives it a special competence in its various fields of endeavor, all of which have been acquired at considerable expense to ABIOMED.

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The Employee recognizes that ABIOMED is engaged in a continuous program of research and development of such Proprietary Information. The Employee understands that as part of his/her employment he/she is expected to make contributions of value to ABIOMED, including the development of Proprietary Information. He acknowledges that his/her employment creates a relationship of confidence and trust between him/herself and ABIOMED with respect to information of a confidential nature which is discovered, made known to, or learned by him/her during the period of his/her employment, including Proprietary Information.

The Employee agrees to promptly disclose to ABIOMED all inventions conceived or put to practice while employed at ABIOMED, regardless of whether the development of the invention was funded by ABIOMED or by an external entity, government or private.

The Employee will not without the express authorization from an authorized ABIOMED officer, during or after the term of his/her employment, disclose any Proprietary Information, or anything relating to it, to any person other than authorized ABIOMED personnel. Nor shall the Employee use any such information for his/her personal benefit or disclose or use for his/her personal benefit any information furnished by a third party to ABIOMED in confidence.

The Employee agrees that in the event of the termination of his/her employment for any reason, he/she will deliver to ABIOMED and shall not take with him/her, all documents and materials of any nature pertaining to any Proprietary Information. Employee shall execute a certificate in the form of Appendix B , at the time of termination of employment confirming compliance with the requirements of this Section and other provisions of this Agreement relating to the treatment of Proprietary Information.

Assignment of Proprietary Information.

The Employee agrees that he/she will promptly disclose to ABIOMED, or its assigns, all discoveries, processes, software, formulae, data, know-how and techniques, whether or not patentable or protectable by copyright, made or conceived, first reduced to practice, or learned by him/her, either alone or jointly with others, during the period of his/her employment which (i) relate to or are useful in the business of ABIOMED, or (ii) are conceived, made or worked on at the expense of, or during the Employee’s normal working hours for, ABIOMED or using any resources or materials of ABIOMED, or (iii) arise out of tasks assigned to him/her by ABIOMED, or (iv) are within the scope of his/her employment by ABIOMED (collectively, “Proprietary Inventions”).

All Proprietary Inventions shall be the sole property of ABIOMED and its assigns, and ABIOMED and its assigns shall be the sole owner of all patents, copyrights and other rights in connection therewith. In consideration of his/her employment by ABIOMED and regardless of any change in the Employee’s salary or the nature of the Employee’s employment, the Employee hereby assigns to ABIOMED, or its assigns, the Employee’s entire right, title and interest in and to any and all Proprietary Inventions.

The Employee, at the expense of ABIOMED, agrees to assist ABIOMED and its assigns in every proper way to obtain and enforce patents, copyrights and other intellectual property rights on Proprietary Inventions in any and all countries. To that end, the employee agrees to execute all papers, and perform all acts necessary to make this Agreement effective as to any particular Proprietary Inventions, application for letters patent, and other rights and interests of ABIOMED or its assigns, including the giving of testimony without expense to the Employee and without further compensation except as provided for in accordance with

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ABIOMED’s “Patent Awards Policy” as it may be amended from time to time, a copy of which is attached hereto as Appendix C and made a part of this Agreement by reference. The obligations of the Employee under this paragraph (c) shall continue beyond the termination of his/her employment with ABIOMED.

As a matter of record, and in order to avoid disputes over the application of Sections 5 and 6, the Employee has attached to this Agreement, as Appendix C , a complete list of all inventions made, conceived, or first reduced to practice by Employee, alone or jointly with others, prior to his/her employment with ABIOMED, that are not described in a publication or patent application in existence on the date of this Agreement, and that the Employee desires, and ABIOMED agrees to exclude from the effect of this Agreement. If no such list is attached to this Agreement, he/she represents that he/she has no such inventions and improvements at the time of signing this Agreement.

If any application for any United States or foreign patent, copyright or other intellectual property rights related to or useful in the business of ABIOMED shall be filed by or for the Employee within a period of one (1) year after the termination of his/her employment, the subject matter covered thereby shall be presumed to have been conceived during his employment with ABIOMED.

Covenant Not to Compete.

Noncompetition . The Employee recognizes that ABIOMED is engaged in the research, development, manufacturing and marketing of proprietary products in the United States and throughout the world, and that it is of utmost importance to ABIOMED to maintain the confidentiality of its Proprietary Information and preserve the good-will of its business. In order to safeguard that Proprietary Information and good-will, the Employee understands that it is a condition of his/her employment not to compete with ABIOMED, in the United States or any other country, for a period of time following the termination of his/her employment, as set forth in further detail below.

The Employee agrees that for a period of two (2) years following the termination of his/her employment, he/she will not directly, for his/her own account or for any other person, as agent, employee, officer, director, trustee, consultant, owner, partner, or shareholder, or any other capacity:

hire or attempt to hire or assist any other person in hiring or attempting to hire any employee of ABIOMED; or

ii.

encourage or assist any other person in encouraging any director, officer, employee, agent, consultant or any other person affiliated with ABIOMED to terminate or alter his/her or its relationship with ABIOMED; or

iii.

encourage or assist any other person in encouraging any customer or supplier of ABIOMED to terminate or alter its relationship with ABIOMED; or

iv.

sell or market or assist any other person in selling or marketing any product or service that competes, directly or indirectly with any product or service manufactured, sold or under development by ABIOMED at the time the Employee’s employment with ABIOMED is terminated; or

research, develop or manufacture or assist any other person in researching, developing or manufacturing any product or service that competes with any product or service conceived, manufactured, sold or under development by ABIOMED at the time the Employee’s employment with ABIOMED is terminated.

In order to assure that the Employee does not breach any of the foregoing provisions, the Employee agrees that for a period of two (2) years following the termination of his/her Employment he will not accept employment with, advise, provide consulting services to or

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acquire any interest in (other than an investment interest of less than 5% of the total outstanding shares of a publicly traded company) any business that directly or indirectly competes with any product or service conceived, manufactured, sold or under development by ABIOMED without first obtaining the written consent of ABIOMED. ABIOMED shall be permitted to withhold such consent in its sole discretion, unless the Employee and the prospective employer are able to provide ABIOMED with assurances reasonably satisfactory to ABIOMED in its sole discretion that the Employee will not be assisting the prospective employer in any of the prohibited endeavors listed in paragraph (b) above.

The Employee has carefully read and considered the restrictions in this Section 7 and agrees that the restrictions are fair and reasonable and are reasonably required for the protection of the interests of ABIOMED.

Conflicting Agreements. The Employee represents and warrants that he/she is free to enter into this Agreement, that the Employee has not made and will not make any agreements (oral or in writing) in conflict with this Agreement, and will not disclose to ABIOMED. not use for ABIOMED’s benefit, any trade secrets or confidential information that is the property of any other party now or hereafter in the Employee’s possession. The Employee represents that he/she has provided to ABIOMED, copies of all employment, proprietary information and other similar agreements to which he/she is a party that are currently in effect.

Remedies . In order to avoid irreparable injury to ABIOMED, in the event of any breach or threatened breach by the Employee of the provisions of this Agreement, ABIOMED shall be entitled to an injunction restraining such breach. Nothing herein shall be construed as prohibiting ABIOMED from pursuing any other remedies available to ABIOMED for such breach or threatened breach, including the recovery of damages from the Employee. The Employee agrees that in the event that he/she breaches his/her duty of loyalty to Company or any of his/her covenants in Sections 5 through 7, in addition to any and all other remedies which ABIOMED may have available to it, ABIOMED will be entitled, at its election, to recover from the Employee (i) the value of anything belonging to ABIOMED which the Employee uses in breach of such duty, or (ii) any benefit which the Employee receives as a result of his/her breach, or its proceeds, and ABIOMED shall also be entitled to recover from the Employee the amount of damages thereby caused. In the event of termination of the Employee’s employment for breach of any of the covenants under this Agreement, Employee agrees that he shall thereby forfeit all rights granted to him under any stock option, profit participation, bonus or deferred compensation arrangement of ABIOMED then existing in which he/she participates, to the extent permitted by law.

10.

Notices . Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and hand delivered or if sent by registered mail to his/her last known residence in case of the EMPLOYEE and to its principal place of business in the case of ABIOMED.

11.

Independence of Employee’s Covenants . The covenants on the part of EMPLOYEE to be performed under this Agreement shall be construed as agreements independent of any other provisions of this Agreement, and the existence of any claims or cause of action of EMPLOYEE against ABIOMED, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by ABIOMED or its assigns of any of the Employee’s covenants hereunder.

12.

Waiver . The failure of ABIOMED to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such terms, covenants, or conditions, nor shall any waiver or relinquishment of any right or power hereunder at any one or more times deemed a waiver of relinquishment of such power or right at any other time or times.

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13.

Severability . The invalidity or unenforceability of any provision hereof shall in no way effect the validity of enforceability of any other provision. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision hereof shall be prohibited by or invalid under any such law, that provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or nullifying the remainder of that provision or any other provisions of this Agreement.

14.

Benefit . Except as otherwise herein expressly provided, this Agreement shall inure to the benefit of and by binding upon ABIOMED, its successors and assigns, and the Employee, his/her heirs, executors, administrators, and legal representatives, provided that the obligations of the Employee hereunder may not be delegated.

15.

Construction . For purposes of this Agreement, unless the context otherwise requires, the term “person”, shall include any individual, corporation, partnership, joint venture, association, joint-stock company, trust company, trust, unincorporated organization, government agency or entity or any subdivision thereof, or any other entity.

16.

Governing Law: Consent to Jurisdiction . This Agreement shall be construed as a Massachusetts contract under seal and shall be interpreted in accordance with the internal laws of the Commonwealth of Massachusetts. The Employee hereby agrees to the jurisdiction of the courts in the Commonwealth of Massachusetts and waives any objection based upon forum non conveniens with respect to any action instituted concerning any dispute arising in connection with this Agreement or the employment of the Employee by ABIOMED. ABIOMED shall have the right to bring any action or proceeding against the Employee in the courts of any other jurisdiction ABIOMED reasonably deems necessary to rely on its rights under this Agreement.

17.

Entire Agreement . This instrument contains the entire agreement of the parties. It may not be changed orally, but only by an agreement in writing signed by the parties.

IN WITNESS WHEREOF , this Agreement has been executed under seal on the date and year first above written. This Agreement has been executed under seal as of the date and year first above written.


Employee:						ABIOMED, Inc.:

Signature:						Signature:



Name (Printed):						Name (Printed):

Date:						Date:

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APPENDIX A

ABIOMED, Inc.

CONFLICT OF INTEREST POLICY

GENERAL :

Each employee of ABIOMED is expected to act in the best interest of ABIOMED and to refrain from placing himself or herself in the position that could produce a conflict between his or her interest and the interests of ABIOMED or any employee benefit plan or trust funded by ABIOMED. It is the duty of all employees to act in good faith at all times and not to utilize their employment for private personal advantage.

This policy, while not covering every conceivable area of conflict of interest, is intended to review and restate certain broad ethically sound principles of conduct that are to be used as guidelines whenever a question may arise. ABIOMED’s “Guidelines of Company Principles and Practices” are made herein part of the Schedule by reference.

As used herein, the term ABIOMED shall mean ABIOMED, Inc. and its affiliates, the ABIOMED Limited Partnership, and any employee benefit plan or trust funded by ABIOMED. The term “member of immediate family” shall mean the employee’s spouse and a relative of the employee or of his or her spouse living in the employee’s household. A person, firm, or corporation which acts for or represent a supplier of goods and services in the sale of such goods and services to ABIOMED shall also be deemed to be doing business with ABIOMED.

POLICY GUIDELINES :

No official or employee of ABIOMED may serve as an officer, employee, or director of or consultant to any business entity which does business with or is competitive with ABIOMED, unless prior approval is obtained from the President of ABIOMED.

No official or employee of ABIOMED or member of his or her immediate family may accept, directly or indirectly, from any person, firm, or corporation doing business with ABIOMED, any money, loans (except loans from banks or other lending institutions in the normal course of their business) or any gift or gratuity, favor or service, which might conceivably tend to induce him or her to violate his or her duties to ABIOMED. The foregoing is not intended to prohibit the acceptance of promotional or advertising items marked with the name of the donor, or items distributed by donors to all of their customers.

No official or employee of ABIOMED or member of his or her immediate family may have any direct or indirect interest in any business entity doing business with ABIOMED or in any business in which ABIOMED may hereafter become engaged if such interest represents a substantial proportion of such business entity. In any case where a direct or indirect interest in any such business entity exists, the same must be disclosed to, and approved in writing by the President of ABIOMED. There shall be excluded from the foregoing prohibition any direct or indirect interest in any corporation (a) which is publicly owned; and (b) whose securities are actively traded on any stock exchange or on any over-the-counter market; and (c) in which such officer or employee and members of his or her immediate family own less that 1% of the outstanding shares of each class of equity securities.

No official or employee of ABIOMED may utilize the services of any person employed by ABIOMED for improvement or maintenance of his or her property on Company time.

No ABIOMED products or property shall be sold by ABIOMED to any person employed by ABIOMED except through channels and pursuant to policies authorized by the CEO of ABIOMED.

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APPENDIX B

ABIOMED, Inc.

ACKNOWLEDGMENT UPON TERMINATION OF EMPLOYMENT

I have re-read and understand my obligations under Paragraph 9 of my Nondisclosure and Non Competition Agreement with ABIOMED, Inc. and will abide therewith.

DEFINITIONS . The following definitions shall form an integral part of this Acknowledgment.

ABIOMED . ABIOMED, Inc., and except where context otherwise requires, its affiliates.

Affiliate . Means any business entity controlled by, controlling or under common control with ABIOMED, other than ABIOMED Limited Partnership.

Trade Secrets . Concepts, devices, designs, developments, disclosures, discoveries, formulae for chemical compounds, ideas, improvements, inventions, know-how, materials, formulations, methods, processes, research and development projects and results, specifications, systems, technical data, and any other technical information concerning the identity of actual or prospective customers or suppliers, business and marketing plans and strategies, all whether written or unwritten, and whether patentable or not.

Related Materials . Any and all documentation, memoranda, notebooks, photos, sketches, prints, drawings, research materials, charts, graphs, machinery, prototypes, tools, written material, and plans.

Partnership . ABIOMED Limited Partnership, a Massachusetts limited partnership.

Proprietary Information . All Trade Secrets and Related Materials, plus such financial data, statistical data, marketing data, data of all kinds, production and other costs, salaries, and any other information dealing with business operations or proposed business activities which Employee knows or has reason to know are intended by ABIOMED to remain confidential.

OWNERSHIP, ASSIGNMENT, AND DISCLOSURE OF TRADE SECRETS,

RELATED MATERIALS, PROPRIETARY INFORMATION, AND PATENTS.

Acknowledgment : The EMPLOYEE recognizes that ABIOMED is or will be engaged in highly competitive business in which the protection of its and the Partnership’s Trade Secrets, Related Materials, Proprietary Information, and Patents is essential to the success of ABIOMED.

Prior Inventions : As a matter of record, and in order to avoid disputes over the applications of the Paragraph 9, EMPLOYEE attaches to this Agreement as Schedule B, a complete list of all inventions made, conceived, or first reduced to practice alone or jointly with others, prior to his employment, that are not, and will not be, described in a publication or patent application in existence on the effective date of this Agreement, and that EMPLOYEE wants to exclude from the effect of this Agreement. If employee has no such Inventions as of the effective date of this Agreement, EMPLOYEE should represent that it has no such Inventions where indicated on Schedule B.

Ownership of Trade Secrets, Related Materials, and Proprietary Information : EMPLOYEE acknowledges and agrees that ABIOMED and its successors and assigns are the sole, absolute, unqualified, and exclusive owner of all Trade Secrets, Related Materials, and Proprietary Information learned, supplied, developed, or conceived by EMPLOYEE during EMPLOYEE’S

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employment with ABIOMED, even if learned or developed with, by, or from other sources. The EMPLOYEE also agrees that he/she will not use for personal benefit during or after employment with ABIOMED any information relating to Trade Secrets, Related Materials, or Proprietary Information owned or controlled by ABIOMED or the Partnership and acquired during employment at ABIOMED.

Assignment of Trade Secrets, Related Materials, Proprietary Information, and Patents : In consideration of his/her employment by ABIOMED and the salary or wages to be paid or being paid to EMPLOYEE and regardless of any change in EMPLOYEE’S salary or the nature of EMPLOYEE’S employment, EMPLOYEE hereby assigned to ABIOMED (or to an Affiliate as agent for the Partnership, as ABIOMED, the Affiliate and the Partnership shall agree), his/her entire right, title, and interest in and to any and all Trade Secrets, Related Materials, and Proprietary Information (i) originated with, learned, acquired, or developed by EMPLOYEE solely or jointly with others, whether on company time or his/her own, during the period of employment with ABIOMED, or (ii) created or developed using ABIOMED’s resources or materials, or (iii) suggested by any work which EMPLOYEE has done, is doing, or may do, for ABIOMED, so far and only so far as the same relate to or may be useful in the business of ABIOMED as now or at anytime carried on, including experimental or research work.

Assistance in Prosecution of Patents. Etc. ABIOMED or its assigns, at their expense, shall be entitled to procure letters patent, domestic or foreign, or copyrights, on any of the Trade Secrets, Related Materials, and Proprietary Information above assigned, in their own name. EMPLOYEE shall execute all documents necessary to permit ABIOMED or its assigns to obtain such letters patent or copyrights, and will cooperate fully in regard to such person obtaining or attempting to obtain such letters, patents, or copyrights, EMPLOYEE further agrees to sign all papers, take all rightful oaths, and perform all acts necessary to make this Agreement effective as to any particular Trade Secret, Related Material, Proprietary Information, Application for Letters Patent, domestic or foreign, including any extension, division or reissues thereof, and will do all lawful acts to protect the patents, copyrights, and other rights and interests of ABIOMED, an Affiliate, or the Partnership, including the giving of testimony without expense to EMPLOYEE and without further compensation except as provided for in accordance with ABIOMED’s “Patent Awards Policy”, a copy of which is attached hereto as Schedule C and made a part of this Agreement by reference.

Non-Disclosure of Trade Secrets, Related Materials, and Proprietary Information : EMPLOYEE agrees that at no time, whether during EMPLOYEE’S employment by ABIOMED or at any time thereafter, and regardless of the reason for the termination of EMPLOYEE, shall EMPLOYEE disclose any Trade Secret, Related Materials, or Proprietary Information owned or controlled by ABIOMED or the Partnership to any person, firm, government entity, corporation, association, or entity without the prior written consent of ABIOMED, the Affiliate or the Partnership, whichever is authorized to permit such disclosure, nor shall EMPLOYEE disclose any Trade Secrets, Related Materials, or Proprietary Information furnished to ABIOMED or Partnership under confidential or proprietary contracts or agreements with any other person, firm, government agency, or entity.

Acknowledgment Upon Termination of Employment : At the time of the EMPLOYEE’S termination of employment with ABIOMED, regardless of the circumstances or cause of said termination, EMPLOYEE shall certify with their signature of this document, which confirms the substance of these provisions.

I certify that in accordance with the terms of said Agreement, I have disclosed to ABIOMED any and all inventions, formulas, methods, materials formulations, devices, ideas, concepts, developments, research results, discoveries, and improvements, patentable or unpatentable, originating with, acquired or developed by me solely or jointly with others, during the course of my employment with ABIOMED.

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I certify that all Proprietary Information, Trade Secrets, and Related Materials that are the property of employers previous to my employment with ABIOMED, were not disclosed to ABIOMED or any of its Affiliates, nor were these used during my employment at ABIOMED.

I further certify that I have not in the past, and will not in the future, use for my own benefit or disclose to any person, firm, government agency, corporation, association, or entity any Trade Secret, Related Material, or Proprietary Information owned or controlled by ABIOMED without the prior written consent of ABIOMED. Neither have I in the past nor will I in the future, disclose any Trade Secret, Related Material, or Proprietary Information furnished to ABIOMED under confidential or proprietary contracts or agreements with any other person, firm, government agency or entity, except to such extent as has been necessary and permitted in the original course of performance of my duties as an EMPLOYEE of ABIOMED.


Employee to sign upon termination only:						Witness:

Signature:						Signature:

Date:						Date:

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APPENDIX C

ABIOMED, Inc.

List of all Inventions made, conceived, or first reduced to practice alone or jointly with others, prior to EMPLOYEE’S employment with ABIOMED that are not, and will not be, described in a publication or patent application in existence on the effective date of this Agreement, and that EMPLOYEE wants to exclude from the effects of this Agreement.


Employee to sign if inventions are listed above:						Witness:

Signature:						Signature:

Date:						Date:

If no list is provided above, EMPLOYEE represents that no invention exists on the effective date of this Agreement and will sign and date below.


Employee to sign if no inventions listed:						Witness:

Signature:						Signature:

Date:						Date:

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Exhibit 10.4

ABIOMED, Inc.

Performance- and Time-Based Restricted Stock Unit Award Agreement

This Performance- and Time-Based Restricted Stock Unit Award Agreement (this “ Agreement ”) is made effective as of [GRANT DATE] (the “ Grant Date ”), between ABIOMED, Inc. (the “ Company ”), and [EMPLOYEE NAME] (the “ Employee ”), pursuant to the Company’s 2008 Stock Incentive Plan, as it may be amended from time to time (the “ Plan ”). Pursuant to this Agreement, the Employee is provided the opportunity to earn [●] shares of common stock of the Company (“ Stock ”) if designated performance goals are achieved at target levels and up to [●] shares of Stock if designated performance goals are achieved at or above the maximum levels, subject in all cases to vesting and the other terms and conditions set forth herein. This Agreement and the Award (as defined below) are expressly subject to all of the terms and conditions contained in the Plan, which is hereby incorporated herein by reference. In the event that any of the terms and conditions contained in this Agreement are inconsistent with the Plan, the terms of the Plan shall control. All capitalized terms not defined in this Agreement have the meanings specified in the Plan.

WITNESSETH:

1. Performance- and Time-Based Restricted Stock Units . The Company hereby grants to the Employee on the Grant Date an award (the “ Award ”) consisting of the right to receive, on the terms provided herein and in the Plan, one share of Stock with respect to each restricted stock unit forming part of the Award (collectively, the “ Restricted Stock Units ”), in each case, subject to adjustment pursuant to Section 4 of the Plan in respect of transactions occurring after the Grant Date. The Employee is hereby granted [●] Restricted Stock Units. Shares of Stock shall only be issued to the Employee in respect of the Award to the extent that the terms of this Agreement and the Plan are satisfied and to the extent that the Employee meets both the performance-based vesting conditions and time-based vesting conditions set forth below.

2. Performance Vesting . The Restricted Stock Units shall performance vest and become performance-vested Restricted Stock Units (“ Performance-Vested RSUs ”), provided that the Employee remains continuously employed by the Company through the applicable TSR Measurement Date (as defined below) (subject to Section 5 below), as follows: (a) no portion of the Restricted Stock Units shall become Performance-Vested RSUs if the TSR Percentile Rank (as defined below) is below the 50 ^th percentile, (b) 100% of the Restricted Stock Units shall become Performance-Vested RSUs if the TSR Percentile Rank is at the 50 ^th percentile, (c) 150% of the Restricted Stock Units shall become Performance-Vested RSUs if the TSR Percentile Rank is at the 70 ^th percentile, (d) 200% of the Restricted Stock Units shall become Performance-Vested RSUs if the TSR Percentile Rank is at the 80 ^th percentile, (e) 250% of the Restricted Stock Units shall become Performance-Vested RSUs if the TSR Percentile Rank is at the 90 ^th percentile, and (f) 300% of the Restricted Stock Units shall become Performance-Vested RSUs if the TSR Percentile Rank is at or above the 95 ^th percentile. In the event that the TSR Percentile Rank falls between two of the percentiles described in the preceding sentence, the percentage of the Restricted Stock Units that becomes Performance-Vested RSUs shall be based on a straight-line interpolation between the applicable TSR Percentile Ranks and the percent of Restricted Stock Units that vest at each such rank. Notwithstanding the foregoing, in no event shall any Restricted Stock Units become Performance-Vested RSUs if the Total Shareholder Return over the Performance Period is negative.

3. Time Vesting . The Performance-Vested RSUs shall only vest to the extent that they become vested based on time as provided for below. On each of the following dates (each, a “ Time Vesting Date ”), and provided that the Employee remains continuously employed by the Company through such Time Vesting Date (subject to Section 5 below), a portion of the Performance-Vested RSUs shall vest as set forth below:

(a)

One half (1/2) of the Performance-Vested RSUs shall vest on the date that the Committee determines the Company’s TSR Percentile Rank, which shall be no later than thirty (30) days following the end of the Performance Period (the “ Determination Date ”).

(b)

The remaining one half (1/2) of the Performance-Vested RSUs shall vest on the first anniversary of the Determination Date.

Notwithstanding the foregoing, 100% of the Restricted Stock Units shall be fully vested (i.e., both time-vested and performance-vested) upon a Change of Control that occurs during the Performance Period, provided that no portion of the Restricted Stock Units shall vest if Total Shareholder Return is negative between the start of the Performance Period and the Date of the Change of Control. In the event the TSR Percentile Rank is above the 50 ^th percentile at the time of a Change of Control based on actual performance from the beginning of the Performance Period through the date of the Change of Control, an additional portion of the Restricted Stock Units shall vest consistent with the vesting terms set forth in Section 2 above (e.g., an additional 50% (i.e., 150%) of the Restricted Stock Units shall vest if the TSR Percentile Rank is at the 70 ^th percentile, etc., with straight-line interpolation between the applicable TSR Percentile Ranks and the percent of Restricted Stock Units that vest at each such rank). If a Change of Control occurs following the end of the Performance Period, any outstanding unvested Performance-Vested RSUs shall be fully vested upon such Change of Control. For purposes of this Agreement, the term “Time Vesting Date” shall also mean a Change of Control. Certificates for the shares of Stock that are issuable as a result of the Performance-Vested RSUs or Restricted Stock Units, as applicable, vesting as set forth above shall be issued as soon as practicable following each Time Vesting Date, but in no event later than thirty (30) days following each Time Vesting Date.

4. Certain Definitions .

(a)

“ Peer Group ” shall mean the companies in the S&P Health Care Equipment Select Industry Index, determined as of the Grant Date. A company in this group that ceases to be publicly traded during the first two years of the Performance Period will not be treated as part of the Peer Group. A company listed above that ceases to be publicly traded in the final year of the Performance Period will be included in the Peer Group and its Total Shareholder Return will be determined by treating the last day of public trading of the company’s stock as the valuation date for that company, with no further adjustment to that company’s Total Shareholder Return for the remainder of the Performance Period.

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(b)

“ Performance Period ” shall mean the period beginning on June 15, 2015 and ending on June 14, 2018.

(c)

“ Total Shareholder Return ” shall mean the change in the value expressed as a percentage of a given dollar amount invested in a company’s most widely publicly traded stock over the Performance Period, taking into account both stock price appreciation (or depreciation) and the reinvestment of dividends (including the cash value of non-cash dividends) in such stock of the company. The thirty (30) calendar-day average closing value of the Company’s Stock and the stock of each of the Peer Group companies, as applicable (i.e., average closing values over the period of thirty (30) calendar days beginning on the first day of the Performance Period and the final thirty (30) calendar days ending on the final day of the Performance Period) will be used to value the Company’s Stock and the stock of the Peer Group companies, as applicable. Dividend reinvestment will be calculated using the closing price of the Stock or the stock of the applicable Peer Group company, as applicable, on the dividend payment date or, if no trades were reported on such date, the latest preceding date for which a trade was reported. Not withstanding the foregoing, in the event of a Change of Control, Total Shareholder Return for the Company will be measured based on the closing value of the Company’s Stock on the date of the Change of Control.

(d)

“ TSR Measurement Date ” means the last day of the Performance Period, except as otherwise provided in the definition of “Peer Group” or as determined by the Committee.

(e)

“ TSR Percentile Rank ” shall mean the percentage of Total Shareholder Return values among the Peer Group companies at the TSR Measurement Date that are equal to or lower than the Company’s Total Shareholder Return at the TSR Measurement Date.

5. Termination of Employment .

(a)

The Employee understands and agrees that if the Employee ceases to be an employee of the Company or a subsidiary of the Company at any time for any reason, whether because of any action of the Company or the Employee (the date of such termination of employment, the “ Termination Date ”), other than by reason of the death or Disability of the Employee, the Employee’s only rights under this Agreement shall be the right to receive Stock, if any, that was to be issued (but was not yet issued) pursuant to Restricted Stock Units or Performance-Vested RSUs, as applicable, vesting on a Time Vesting Date that was reached prior to the Termination Date, and the Employee shall have no right to the issuance of Stock with respect to any Restricted Stock Units or Performance-Vested RSUs, as applicable, vesting on a Time Vesting Date that is reached after the Termination Date and any Restricted Stock Units or Performance-Vested RSUs, as applicable, that are unvested on the Termination Date shall automatically be forfeited on such date.

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(b)

If the Employee ceases to be an employee of the Company or a subsidiary of the Company by reason of the death or Disability of the Employee prior to the end of the Performance Period, the Employee will be eligible to vest in the number of Restricted Stock Units that would otherwise vest pursuant to Section 2 based on the Company’s TSR Percentile for the Performance Period, multiplied by the number of days between the first day of the Performance Period and the Termination Date, and divided by the number of days in the Performance Period shall vest upon the Termination Date. Any shares of Stock that become issuable following the vesting of the Restricted Stock Units pursuant to the immediately preceding sentence shall be issued as soon as practicable following the Determination Date, but in no event later than thirty (30) days following such date. If the Employee ceases to be an employee of the Company by reason of the death or Disability of the Employee following the end of the Performance Period, any unvested Performance-Vested RSUs shall vest upon the Termination Date. Any shares of Stock that become issuable following the vesting of the Performance-Vested RSUs shall be issued as soon practicable following such termination, but in no event later than thirty (30) days following such date.

6. Discretion of the Committee . Unless otherwise provided, the Committee shall make all determinations required to be made hereunder, including determinations required to be made by the Company, which shall include determinations of Total Shareholder Return, the TSR Percentile Rank, and the calculation of the number of Performance-Vested RSUs hereunder, and shall interpret all provisions of this Agreement, as it deems necessary or desirable, in its sole and unfettered discretion. Such determinations and interpretations shall be binding and conclusive as to the Company and the Employee. If there shall be no Compensation Committee of the Company’s Board of Directors or if the Board of Directors shall determine that the Board of Directors shall administer this Agreement, all references herein to the Committee shall be deemed references to the Board of Directors.

7. Withholding Taxes .

(a)

The Employee expressly acknowledges and agrees that the Employee’s rights hereunder, including the right to be issued shares of Stock upon the vesting of the Restricted Stock Units (or any portion thereof), are subject to the Employee’s promptly paying, or in respect of any later requirement of withholding being liable promptly to pay at such time as such withholdings are due, to the Company all taxes required to be withheld, if any (the “ Withholding Obligation ”).

(b)

By accepting this Award, the Employee hereby acknowledges and agrees that, unless he or she provides notice to the Company at least two (2) days prior to a Time Vesting Date that he or she intends to satisfy the applicable Withholding Obligation by paying such amount in cash or with a check in a form acceptable to the Company and delivers such cash or check no later than the Time Vesting Date, he or she will have been deemed to have elected to have the Company hold back whole shares of Stock otherwise deliverable pursuant to Section 3 or Section 5, as applicable, having a Fair Market Value sufficient to satisfy the Withholding Obligation (but not in excess of the applicable minimum statutory withholding obligations or such greater amount that would not result in adverse accounting consequences to the Company), with the Company accepting a payment in cash or by check by the Employee to the extent of any remaining balance of the Withholding Obligation not satisfied by such withholding of shares.

(c)

The Employee expressly acknowledges that because the Award consists of an unfunded and unsecured promise by the Company to deliver Stock in the future, subject to the terms hereof, it is not possible to make a so-called “83(b) election” with respect to the Award.

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8. No Rights to Employment . Nothing contained in this Agreement shall be construed as giving the Employee any right to continued employment with the Company, or to establish or maintain an on-going business relationship with the Company. The Employee acknowledges and agrees that the transactions contemplated hereunder do not constitute an express or implied promise of continued employment for any period, or at all.

9. Dividend Equivalents . Dividend Equivalents shall be credited on Restricted Stock Units other than Restricted Stock Units that, at the relevant record date for a dividend payment on Stock, previously have been settled or forfeited, in respect of any cash dividend or distribution declared and paid by the Company. In such case, an amount equal to the cash amount per share of such dividend or distribution shall be credited with respect to each Restricted Stock Unit outstanding as of the record date, such dividend equivalents to be calculated at the time of settlement and credited and paid in cash at settlement, without interest, in respect of the Restricted Stock Units then being settled in accordance with the provisions of Section 3 or Section 5 of this Agreement. For the avoidance of doubt, in no event shall a Participant receive any dividend equivalents with respect to Restricted Stock Units that do not vest in full hereunder.

10. No Rights as a Shareholder . The Employee shall have no rights as a shareholder of the Company as a result of this Agreement unless and until shares of Stock have been issued to the Employee pursuant to Section 3 or Section 5 above, as applicable.

11. Nontransferability . Neither the Award nor the Restricted Stock Units may be transferred. In the event the Award or the Restricted Stock Units are transferred, or in the event a spouse or domestic partner has or is deemed to have any community property rights with respect to the Award or the Restricted Stock Units, the transferee, spouse, or domestic partner, as applicable, will be subject to and bound by all terms and conditions of this Agreement and the Plan.

12. Notices . Any notices required to be given under this Agreement shall be sufficient if in writing and if sent by certified mail, return receipt requested, and addressed as follows:

If to the Company:

ABIOMED, Inc.

22 Cherry Hill Drive

Danvers, Massachusetts 01923

Attn: Chief Financial Officer

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If to the Employee, at the address of the Employee set forth in the Company’s records or to such other address as either party may designate under the provisions hereof.

13. Form S-8 Prospectus . The Employee acknowledges having received and reviewed a copy of the prospectus required by Part I of Form S-8 relating to shares of Stock that may be issued under the Plan.

14. Section 409A of the Code . This Agreement shall be interpreted and administered in such a manner that all provisions relating to the grant and settlement of the Award are exempt from or satisfy the requirements of Section 409A of the Code. In no event, however, will the Company or any other person have any liability to the Employee as a result, or in respect of, of Section 409A of the Code.

15. Applicable Law . This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without giving effect to the conflict of law principles thereof. For the purpose of litigating any dispute that arises under this Agreement, whether at law or in equity, the parties hereby consent to exclusive jurisdiction in Massachusetts and agree that such litigation shall be conducted in the state courts of Middlesex County or the federal courts of the United States for the District of Massachusetts.

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IN WITNESS WHEREOF, the parties have executed this Agreement as an instrument under seal effective as of the date written on the first page of this Agreement.


ABIOMED, Inc.

By:
		Michael R. Minogue Its: President and Chief Executive Officer


EMPLOYEE:


Name:		[EMPLOYEE NAME]


Acceptance date:

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Exhibit 31.1

CERTIFICATIONS

I, Michael R. Minogue certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ABIOMED, Inc.

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Exhibit 31.2

I, Michael J. Tomsicek certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ABIOMED, Inc.

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 6, 2015				/s/ MICHAEL J. TOMSICEK
				Michael J. Tomsicek
				Vice President and Chief Financial Officer (Principal Accounting and Financial Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. § 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of ABIOMED, Inc., (the “Company”) for the quarter ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned President and Chief Executive Officer, and Chief Financial Officer, of the Company, certifies, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ MICHAEL R. MINOGUE				/s/ MICHAEL J. TOMSICEK
Michael R. Minogue Chairman, President and Chief Executive Officer				Michael J. Tomsicek Vice President and Chief Financial Officer
Date: August 6, 2015				Date: August 6, 2015

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