Here is my summary of some of the CFO’s remarks.
Revenue up 47% to a record $76 million.
U.S. Impella revenue rose 59% to a record $67 million.
Patient Utilization up 48%.
Gross margin was 84.1%.
We were pleased with this year-over-year and sequential growth, especially considering the significant summer slowdown in U.S. cath labs during July and August. Outside the U.S., Impella revenue totaled $5 million on a constant currency basis, this was up 20%. Worldwide service revenue of $3.9 million was up 18%.
Impella 2.5 has been placed at 1,000 of 1,400 targeted hospital sites for a penetration rate of 71%.
Impella CP has been placed at 739 hospital sites for a penetration ratio of 52% of total hospitals.
Our primary focus is increasing usage at existing sites. However, adding more Impella 2.5 sites and adding Impella CP 5.0 and RP to existing Impella sites will add to future growth.
We have a disciplined approach to establishing new Impella programs, focused on training and achieving quality patient outcomes. Reorders are the driving force behind our growth. U.S. reorders were $59.3 million, up 62% over last year. Our reorder rate was 100%.
Average Impella 2.5 and Impella CP inventory at hospital sites was 2.82 units per site versus 2.73 in the prior quarter, and 2.6 units in the prior year. So inventory growth is far below the growth in usage. These inventory levels are appropriate, reflecting hospitals’ reliance on Abiomed for rapid restocking. But customer inventory levels are expected to slowly grow as utilization increases and new products are introduced.
R&D expense was $11.6 million and was about 15% of revenue. It includes
the submission of the PMA supplements for Impella CP and 5.0,
the ongoing Japanese PMDA submission,
investment in the global cVAD Registry,
and new product development
These investments could lead to R&D expenses for the next two quarters that are slightly higher than our Q2 rate.
SG&A expense for the second fiscal quarter totaled $39.8 million, up 35% from the prior year. There are a number of investments that will boost SG&A for the balance of the year. Some of these investments are in continuing expansion of our commercial team where 15 heads were added this quarter to a total of 189 professionals. And we have made further investments in marketing and infrastructure.
Operating profit for the second fiscal quarter was $12.8 million, or 16.8% of revenue, up over 200% from $4.2 million in the prior year.
GAAP net income was $7.7 million, up over 100% from $3.8 million. GAAP Earnings per share were 17 cents, up from 9 cents.
Although we are recording a GAAP income tax provision at 41%, our actual cash tax payments are negligible due to the application of net operating loss carry forwards from our balance sheet. The company has approximately $70 million additional NOLs remaining.
The balance sheet remains in excellent shape and we ended the quarter with cash up about $19 million to a balance of $176 million.
One final note from the quarter, our past, present and future intellectual property and know-how holds an enormous position in the world of percutaneous circulatory support. In the past, Thoratec attempted to invalidate certain Impella patents in Europe and failed. During this quarter, we responded to further challenges and filed our own case in Germany against Thoratec, now St. Jude, for patent infringement.
Abiomed had invested over $300 million in research and development on percutaneous high pump technology, and we hold 211 patents and have 223 patents pending. This patent portfolio and our strong financial position make us well prepared to assert our pattern right.
Turning to guidance. As noted in our earnings release, we have increased the full year fiscal 2016 revenue guidance and the new range is now $305 million to $315 million, representing growth of 32% to 37% from the prior year. This new range compares to the range noted on our last conference call of $300 million to 310 million, which had been 30% to 35% growth from the prior year.
The company is updating its fiscal year guidance of GAAP operating income to a range of 15% to 17%. This new range compares to 14% to 16% previously guided. These margin ranges incorporate the R&D spend level increase previously mentioned.
In summary, Q2 was a very strong quarter, demonstrating that we are the standard of care. These results validate our business strategy to-date and enable us to make the disciplined investment needed to help Abiomed achieve our long-term vision.