ABIOMED INC : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

Forward Looking Statements

This Report, including the documents incorporated by reference in this Report,
includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements, other than statements of
historical facts, may be forward-looking statements. These forward-looking
statements may be accompanied by such words as "anticipate," "believe,"
"estimate," "expect," "forecast," "intend," "may," "plan," "potential,"
"project," "target," "should," "likely," "will" and other words and terms of
similar meaning. Each forward-looking statement in this Report is subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by such statement. Factors that could cause
actual results or conditions to differ from those anticipated by these and other
forward-looking statements include: the impact of public health threats and
epidemics, including the COVID-19 pandemic and resulting or prolonged economic
downturns on our operations and financial conditions; effects on our
profitability if we are unable to manufacture our products as a result of
natural or man-made disasters; fluctuations in foreign currency exchange rates;
our dependence on Impella® products for most of our revenues; our ability to
successfully compete against our existing or potential competitors; the
acceptance of our products by cardiac surgeons and interventional cardiologists,
especially those with significant influence over medical device selection and
purchasing decisions; the effect of long sales and training cycles associated
with expansion into new hospital cardiac centers; the potential for reduced
market acceptance of our products and reduced revenue due to lengthy clinician
training process; our ability to effectively manage our growth; our ability to
anticipate demand for, and successfully commercialize, our products; the impact
of unsuccessful clinical trials or procedures relating to products under
development; our ability to develop additional and high-quality manufacturing
capacity to support continued demand for our products; our dependence on
third-party payers to provide reimbursement to our customers of our products;
our suppliers' failure to provide the components we require; our reliance on
distributors to sell our products in international markets; our success in
expanding our direct sales activities into international markets; our ability to
sustain profitability at levels achieved in recent years; the unpredictability
of fluctuations in our operating results; our ability to develop and
commercialize new products or acquire desirable companies, products or
technologies; inventory write-downs and other costs due to product quality
issues; risks and liabilities associated with acquisitions of other companies or
businesses, including our ability to integrate acquired businesses into our
operations; the impact of consolidation in the healthcare industry on our
prices; our ability to attract and retain key personnel; our ability to obtain
governmental and other regulatory approvals and market and sell our products in
certain jurisdictions; regulatory or enforcement actions and product liability
suits relating to off-label uses of our products; the increased risk of material
product liability claims and impact on our reputation and financial results; our
ability to maintain compliance with regulatory requirements and continuing
regulatory review; the impact of mandatory or voluntary product recalls;
material impairments caused by shutdowns of the U.S. federal government; changes
in healthcare reimbursement systems in the U.S. and abroad; our ability to
comply with healthcare "fraud and abuse" laws and any related penalties for
non-compliance; our failure to comply with the U.S. Foreign Corrupt Practices
Act and other anti-corruption laws, export control laws, import and customs
laws, trade and economic sanctions laws and other laws governing our operations;
our or our vendors' ability to achieve and maintain high manufacturing
standards; the economic effects of "Brexit" and related impacts to relationships
with our existing and future customers; our potential "ownership change" for
U.S. federal income tax purposes and our limited utilization of net operating
losses from prior tax years; our ability to maintain compliance with, and the
impact on us of changes in, tax laws including U.S. Tax Reform legislation; our
ability to comply with, and the impact of any related costs or regulatory
actions with respect to, environmental, health and safety requirements; our
failure to protect our intellectual property or develop or acquire additional
intellectual property; compliance with laws protecting the confidentiality of
patient health information; disruptions of critical information systems or
material breaches in the security of our systems; risks relating to our shares
of common stock, including market price volatility and the potential for
dilution to our stockholders' ownership interests through the sale of additional
securities; changes in methods, estimates and judgments we use in applying our
accounting policies; changes in accounting standards, tax laws and financial
reporting requirements; the outcome of ongoing securities class action
litigation relating to our public disclosures; and other factors discussed in
"Part I, Item 1A. Risk Factors" of our annual report on Form 10-K for the year
ended March 31, 2021 and the filing subsequently filed with or furnished to the
SEC. Readers are cautioned not to place undue reliance on any forward-looking
statements contained in this Report, which speak only as of the date of this
Report. Any forward-looking statement made in this Report speaks only as of the
date hereof. We undertake no obligation to update or revise these
forward-looking statements whether as a result of new information, future events
or otherwise, unless otherwise required by law.





Overview

We are a leading provider of medical devices that provide circulatory support
and oxygenation. Our products are designed to enable the heart to rest by
improving blood flow and/or provide sufficient oxygenation to those in
respiratory failure. We develop, manufacture and market proprietary products
that are designed to enable the heart to rest, heal and recover by improving
blood flow to the coronary arteries and end-organs and/or temporarily assisting
the pumping function of the heart. Our products are used in the cardiac
catheterization lab, or cath lab, by interventional cardiologists, the
electrophysiology lab, the hybrid lab and in the heart surgery suite by cardiac
surgeons. A physician may use our devices for patients who are in need of
hemodynamic support

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prophylactically, urgently or emergently before, during or after angioplasty or
heart surgery procedures. We believe that heart recovery is the optimal clinical
outcome for a patient experiencing heart failure because it enhances the
potential for the patient to go home with their own heart, facilitating the
restoration of quality of life. In addition, we believe that, for the care of
such patients, heart recovery is often the most cost-effective solution for the
healthcare system.



Our strategic focus and the driver of our revenue growth is the market
penetration of our family of Impella® heart pumps. The Impella device portfolio,
which includes the Impella 2.5®, Impella CP®, Impella 5.0®, Impella LD®, Impella
5.5® and Impella RP® devices, has supported thousands of patients worldwide. We
expect that most of our product and service revenue in the near future will be
from our Impella devices. Our Impella 2.5, Impella CP, Impella 5.0, Impella LD,
Impella 5.5 and Impella RP devices have U.S Food and Drug Administration or FDA
and CE Mark approval which allows us to market these devices in the U.S. and
European Union. We expect to continue to make additional pre-market approval, or
PMA supplement submissions for our Impella portfolio of devices for additional
indications. Our Impella 2.5, Impella CP and Impella 5.0 devices have regulatory
approval from the Ministry of Health, Labor and Welfare, or MHLW, in Japan.

COVID-19 Pandemic

We are subject to additional risks and uncertainties as a result of the ongoing
COVID-19 pandemic. The ongoing COVID-19 pandemic has adversely impacted and is
likely to further adversely impact our business and markets, including our
workforce and the operations of our customers, suppliers, and business partners.
While the COVID-19 (including new variants of COVID-19) pandemic remains fluid
and continues to evolve differently across various geographies, we believe we
are likely to continue to experience variable impacts on its business,
including, for example: supply shortages, particularly of our product
components; supply chain disruptions, which may limit our ability to manufacture
or distribute our products.

The depth and extent to which the COVID-19 pandemic may directly or indirectly
impact our business, results of operations, financial condition and individual
markets is dependent upon various factors, including the spread of additional
variants; the availability of vaccinations, personal protective equipment,
intensive care unit ("ICU") and operating room capacity, and medical staff; and
government interventions to reduce the spread of the virus. During the second
quarter of fiscal year 2022, we experienced varying levels of recovery across
our product lines and geographic locations from the challenges caused by the
pandemic. Despite these improvements, the impact of COVID-19 on our patient
utilization volumes is likely to vary widely by country, region, and type. In
particular, our Impella product revenue increased in the three and six months
ended September 30, 2021 as a result of sales mix and higher patient utilization
in the U.S., Germany and Japan as compared to the three and six months ended
September 30, 2020, however, in the second quarter of fiscal year 2022, patient
utilization of Impella heart pump devices was negatively impacted by an increase
in COVID-19 hospitalizations and ongoing shortage of hospital workers that
limited ICU capacity which contributed to some deferral of elective procedures.
When COVID-19 infection rates spike in a particular region, our patient
utilization volumes have generally been negatively impacted as hospitals face
capacity limitations, staffing shortages and some in-patient treatments have
been deferred. While we believe there may be a backlog of patients in need of
medical attention that requires the use of our products, it is difficult to
predict when or if those patients may ultimately seek treatment, and therefore,
the extent to which COVID-19 may impact patient utilization and, consequently,
product revenue.

To ensure the health and safety of our global employees, we continue to offer
onsite COVID-19 testing and vaccinations in order to maintain a safe working
environment. Our proactive testing and vaccination programs have reduced
exposure with early detection and enabled our manufacturing facilities to
operate at full capacity.

We continue to closely monitor the impact of COVID-19 on all aspects of our
business and geographies, including any impact on our customers, employees,
suppliers, vendors, business partners and distribution channels, as well as on
procedures and the demand for our products by keeping apprised of local,
regional, and global COVID-19 surges (including new variants of the virus). As
of the date of issuance of these financial statements, the extent to which the
COVID-19 pandemic may materially adversely affect our financial condition,
liquidity or results of operations is uncertain.

Acquisition of preCARDIA

We acquired 100% interest in preCARDIA on May 28, 2021. preCARDIA is a developer
of a proprietary catheter and controller that will complement Abiomed's product
portfolio to expand options for patients with acute decompensated heart failure
("ADHF"). The preCARDIA system is uniquely designed to rapidly treat
ADHF-related volume overload by effectively reducing cardiac filling pressures
and promoting decongestion to improve overall cardiac and renal function. We
acquired preCARDIA for a purchase price of $115.2 million, with a potential
payout of $5 million payable based on achievement of a commercial milestone. The
acquisition was accounted for as an asset acquisition as substantially all of
the fair value of the acquisition related to the acquired in-process research
and development asset. Since the acquired technology platform is pre-commercial
and has not reached technical feasibility, the cost of the in-process research
and development asset was expensed, resulting in a charge of $115.5 million to
the condensed consolidated statements of operations for the six months ended
September 30 2021. In addition, we recognized a gain of $21.0 million related to
our previously owned minority interest within the condensed consolidated
statements of operations for the six months ended September 30 2021.

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Our Existing Products

Impella 2.5®

The Impella 2.5 device is a percutaneous micro heart pump with an integrated
motor and sensors. The device is designed primarily for use by interventional
cardiologists to support patients in the cath lab who may require assistance to
maintain circulation. The Impella 2.5 heart pump can be quickly inserted via the
femoral artery to reach the left ventricle of the heart, where it is directly
deployed to draw blood out of the ventricle and deliver it to the circulatory
system. This function is intended to reduce ventricular work and provide blood
flow to vital organs. The Impella 2.5 heart pump is introduced with normal
interventional cardiology procedures and can pump up to 2.5 liters of blood per
minute.

Our Impella 2.5 device has FDA, CE Mark and MHLW approvals which allows us to
market these devices in the U.S., European Union and Japan, respectively. We
expect to continue to make additional PMA supplement submissions for our Impella
portfolio of devices for additional indications. Our Impella 2.5, Impella CP and
Impella 5.0 devices have regulatory approval from the MHLW in Japan. The Impella
2.5 device also has Health Canada approval which allows us to market the device
in Canada.

Impella CP®

The Impella CP device provides blood flow of approximately one liter more per
minute than the Impella 2.5 device and is primarily used by either
interventional cardiologists to support patients in the cath lab or by cardiac
surgeons in the heart surgery suite.

Our Impella CP device has FDA, CE Mark, and MHLW approval which allows us to
market this device in the U.S., European Union and Japan. We expect to continue
to make additional PMA supplement submissions for our Impella portfolio of
devices for additional indications of Impella CP in the U.S.

Impella 5.0® and Impella LD®

The Impella 5.0 and Impella LD devices are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite. These devices are designed to support patients who require higher levels of circulatory support as compared to the Impella 2.5 or Impella CP.

Our Impella 5.0 and Impella LD devices have FDA, CE Mark and MHLW approval which
allows us to market these devices in the U.S., European Union and Japan. We
expect to continue to make additional PMA supplement submissions for our Impella
portfolio of devices for additional indications. Our Impella 5.0 device also has
Heath Canada approval which allows us to market the device in Canada. We expect
to discontinue production and sale of the Impella LD device in fiscal 2022.

Impella 5.5®

The Impella 5.5 device is designed to be a percutaneous micro heart pump with
integrated motors and sensors. The Impella 5.5 delivers peak flows of greater
than six liters per minute. The Impella 5.5 has a motor housing that is thinner
and 45% shorter than the Impella 5.0 and it improves ease of pump insertion
through the vasculature.

In September 2019, the Impella 5.5 device received a PMA from the FDA for safety
and efficacy in the therapy of cardiogenic shock for up to 14 days in the U.S.
The Impella 5.5 pump was introduced in the U.S. through a controlled rollout at
hospitals with established heart recovery protocols beginning in fiscal year
2020. The Impella 5.5 device received CE Mark approval in Europe in April 2018
is being introduced in Europe through a similar controlled rollout. We have
submitted an application to the PMDA for the Impella 5.5 device in Japan.

Impella RP®

Impella RP device is a percutaneous catheter-based axial flow pump that is
designed to allow greater than four liters of blood flow per minute and is
intended to provide the flow and pressure needed to compensate for right side
heart failure. Our Impella RP device has FDA and CE Mark approval which allows
us to market these devices in the U.S. and European Union. The Impella RP is the
first percutaneous single access heart pump designed for right heart support to
receive FDA approval. The Impella RP device is approved to provide support of
the right heart during times of acute failure for certain patients who have
received a left ventricle assist device or have suffered heart failure due to
AMI, a failed heart transplant, or following open heart surgery. We expect to
continue to make additional PMA supplement submissions for our Impella portfolio
of devices for additional indications.

Impella SmartAssist®

The Impella SmartAssist platform includes optical sensor technology for improved
pump positioning and the use of algorithms that enable improved native heart
assessment during the weaning process. The Impella SmartAssist platform is
currently available for

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our Impella CP, Impella 5.5 and Impella RP heart pumps. The Impella SmartAssist platform is also approved under CE Mark in the European Union and other countries that require a CE Mark approval.

Impella Connect®

Impella Connect is a cloud-based technology that enables secure, remote viewing
of the Automated Impella Controller, or AIC, for physicians and hospital staff.
We began a controlled roll-out of Impella Connect at certain hospital sites
during fiscal year 2020 and have transitioned most of our customers in the U.S.
and continue to introduce this technology to hospitals outside the U.S.

Abiomed Breethe OXY-1 SystemTM

The Breethe OXY-1 System is a portable external respiratory assistance device
that we acquired as part of our acquisition of Breethe, in April 2020 as part of
our efforts to expand our product portfolio to support the needs of patients,
such as those suffering from cardiogenic shock or respiratory failure, whose
lungs can no longer provide sufficient oxygenation. The Breethe OXY-1 System
takes venous blood from the patient, removes carbon dioxide and adds oxygen much
like a human lung, and returns the oxygenated blood safely back to the patient.
In October 2020, the Breethe OXY-1 System received a 510(k) clearance from the
FDA for an all-in-one, compact cardiopulmonary bypass system. We will continue
to conduct a controlled launch of the Breethe OXY-1 System at a limited number
of hospitals in the U.S.

Our Product Pipeline

Impella ECP™

The Impella ECP device is designed for blood flow of greater than three liters
per minute. It is intended to be delivered on a standard sized (9Fr) catheter
and will include an expandable inflow in the left ventricle. The Impella ECP
device has achieved initial FDA safety milestones, including completion of the
first stage in its FDA early feasibility study ("EFS"). The prospective,
multi-center, non-randomized EFS is designed to allow us, study investigators,
and the FDA to make qualitative assessments about the safety and feasibility of
Impella ECP use in high-risk percutaneous coronary intervention ("PCI")
patients. In fiscal year 2021, we received approval from the FDA to expand the
EFS for the Impella ECP device and we continue to enroll patients in this study.
In August 2021, we received Breakthrough Device designation by the FDA for the
Impella ECP device, which is provided pursuant to the FDA's Breakthrough Device
Program, a program intended to help patients receive more timely access to
certain medical technologies by providing a speedier development, assessment and
review process for such technologies. Concurrently, we are finalizing the
protocol of a single arm pivotal high-risk PCI study for the Impella ECP device
as part of an investigational device exemption ("IDE") submission with the FDA.
The Impella ECP device is still in development and has not been approved for
commercial use or sale.

Impella XR Sheath™

The Impella XR Sheath is a low-profile sheath that expands and recoils, allowing
for small bore access and closure with certain Impella heart pumps. It inserts
at 10 French (Fr) and the flexible, nitinol braids momentarily expand during
insertion, then recoil, simplifying access for complex interventions. The
Impella XR sheath is intended to produce less trauma at the arterial access site
compared to large bore sheaths. In December 2020, the Impella XR Sheath for our
Impella 2.5 device received a 510(k) clearance from the FDA. The Impella XR
Sheath for our Impella CP device is still in development and has not been
cleared for commercial use or sale.

Impella BTR™

The Impella BTR device is designed to be a percutaneous micro heart pump with
integrated motors and sensors. The Impella BTR device is designed to be smaller,
provide up to one year of hemodynamic support and is expected to allow for
greater than five liters of blood flow per minute. The Impella BTR device will
also include a wearable driver designed for hospital discharge. The Impella BTR
pump is still in development and has not been approved for commercial use or
sale.

Critical Accounting Policies and Estimates

Other than the accounting policy changes discussed in   "Note 2. Basis of
Preparation and Summary of Significant Accounting Policies"   to our condensed
consolidated financial statements, which is incorporated herein by reference,
there have been no significant changes in our critical accounting policies
during the three and six months ended September 30, 2021, as compared to the
critical accounting policies disclosed in Management's Discussion and Analysis
of Financial Condition and Results of Operations included in our Annual Report
on Form 10-K for the fiscal year ended March 31, 2021.

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Results of Operations for the Three and Six Months Ended September 30, 2021 compared with the Three and Six Months Ended September 30, 2020

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

                                         For the Three Months Ended          For the Six Months Ended
                                                September 30,                      September 30,
                                           2021               2020            2021               2020
Revenue                                      100.0     %        100.0   %       100.0     %        100.0   %
Costs and expenses:
Cost of revenue                               17.7               18.5            17.8               19.9
Research and development                      16.5               14.6            15.7               15.2
Selling, general and administrative           41.4               37.7            41.2               39.4
Acquired in-process research and                 -                  -            23.1                  -
development
Total costs and expenses                      75.6               70.8            97.8               74.5
Operating Income                              24.4               29.2             2.2               25.5
Other income and income tax                   (1.4 )              0.5             3.8                3.0
provision, net
Net income                                    23.0     %         29.7   %         6.1     %         28.5   %




Revenue

The following table disaggregates revenue by products and services:

                                       For the Three Months Ended             For the Six Months Ended
                                              September 30,                         September 30,
                                          2021                 2020             2021                 2020
                                             (in thousands)                        (in thousands)
Product revenue                     $    235,785         $    199,676     $    477,259         $    355,093
Service and other revenue                 12,357               10,088           23,468               19,521
Total revenue                       $    248,142         $    209,764     $    500,727         $    374,614

The following table disaggregates revenue by geographical location:

                                       For the Three Months Ended             For the Six Months Ended
                                              September 30,                         September 30,
                                          2021                 2020             2021                 2020
                                             (in thousands)                        (in thousands)
U.S.                                $    200,485         $    172,147     $    407,628         $    306,872
Europe                                    32,527               25,350           64,764               45,008
Japan                                     12,267               10,311           23,551               19,296
Rest of world                              2,863                1,956            4,784                3,438
Total revenue                       $    248,142         $    209,764     $    500,727         $    374,614

Impella product revenue encompasses Impella 2.5, Impella CP, Impella 5.0, Impella LD, Impella 5.5, Impella RP and Impella AIC product sales and related accessories. Service and other revenue represents revenue earned on service maintenance contracts and preventative maintenance calls.

Total Revenue

Total revenue for the three months ended September 30, 2021 increased by $38.3
million, or 18%, to $248.1 million from $209.8 million for the three months
ended September 30, 2020. Total revenue for the six months ended September 30,
2021 increased $126.1 million, or 34% to $500.7 million from $374.6 million for
the six months ended September 30, 2020. The increase in total revenue from the
three and six months ended September 30, 2020 to the three and six months ended
September 30, 2021 was driven by both Impella product revenue and service and
other revenue, as further described below.

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Impella Product Revenue

Impella product revenue for the three months ended September 30, 2021 increased
by $36.1 million, or 18%, to $235.8 million from $199.7 million for the three
months ended September 30, 2020. Impella product revenue for the six months
ended September 30, 2021 increased by $122.2 million, or 34%, to $477.3 million
from $355.1 million for the six months ended September 30, 2020. Impella product
revenue increased in the three and six months ended September 30, 2021 primarily
related to sales mix and higher patient utilization in the U.S., Germany and
Japan as compared to the three and six months ended September 30, 2020, as we
are experiencing varying levels of recovery across our product lines and
geographic locations due to the challenges caused by the COVID-19 pandemic.
Despite these improvements, the impact of COVID-19 on our patient utilization
volumes is likely to vary widely by country, region, and type. In the second
quarter of fiscal year 2022, patient utilization of Impella heart pump devices
was negatively impacted by an increase in COVID-19 hospitalizations and ongoing
shortage of hospital workers that limited ICU capacity which contributed to some
deferral of elective procedures. When COVID-19 infection rates spike in a
particular region, our patient utilization volumes have generally been
negatively impacted as hospitals face capacity limitations, staffing shortages
and some in-patient treatments have been deferred. While we believe there may be
a backlog of patients in need of medical attention that requires the use of our
products, it is difficult to predict when or if those patients may ultimately
seek treatment, and therefore, the extent to which COVID-19 may impact patient
utilization and, consequently, product revenue.

Service and Other Revenue

Service and other revenue for the three months ended September 30, 2021
increased by $2.3 million, or 23%, to $12.4 million from $10.1 million for the
three months ended September 30, 2020. Service and other revenue for the six
months ended September 30, 2021 increased $4.0 million, or 21%, to $23.5 million
from $19.5 million for the six months ended September 30, 2020.

The increase in total service and other revenue from the three and six months
ended September 30, 2020 to the three and six months ended September 30, 2021
was primarily due to an increase in preventative maintenance service contracts.
We have expanded the number of Impella AIC consoles at many of our existing
higher volume customer sites and continue to sell additional consoles to new
customer sites. We expect revenue growth for service revenue to be consistent
with recent history as most of these higher volume customer sites in the U.S.
have service contracts which typically have three-year terms.

Costs and Expenses

Cost of Revenue

Cost of revenue for the three months ended September 30, 2021 increased by $5.2
million, or 13%, to $43.9 million from $38.7 million for the three months ended
September 30, 2020. Gross margin was 82.3% for the three months ended
September 30, 2021 and 81.5% for the three months ended September 30, 2020.

Cost of revenue for the six months ended September 30, 2021 increased by $14.4
million, or 19%, to $89.1 million from $74.7 million for the six months ended
September 30, 2020. Gross margin was 82.2% for the six months ended
September 30, 2021 and 80.1% for the six months ended September 30, 2020.

The increase in cost of product revenue from the three and six months ended
September 30, 2020 to the three and six months ended September 30, 2021 was
primarily due to increased production volume and investment in direct labor and
overhead as we expanded our manufacturing capacity of our facilities in the U.S.
and Germany. The increase in gross margin from the three and six months ended
September 30, 2020 to the three and six months ended September 30, 2021 was
primarily due to a higher production volume and sales mix primarily associated
with our initial launch of Impella 5.5.

We expect that our ongoing investment in manufacturing capacity and the expansion of our Impella CP SmartAssist and Impella Connect platform may decrease gross margin slightly in the near future.

Research and Development Expenses

Research and development expenses for the three months ended September 30, 2021 increased by $10.5 million, or 34%, to $41.0 million from $30.5 million for three months ended September 30, 2020.

Research and development expense for the six months ended September 30, 2021
increased $21.8 million, or 38% to $78.7 million from $56.9 million for the six
months ended September 30, 2020.

The increase in research and development expenses from the three and six months
ended September 30, 2020 to the three and six months ended September 30, 2021 is
primarily due to our increases in regulatory and quality hiring, ongoing product
development initiatives relating to our existing and pipeline products, the
development of the Impella ECP™, Breethe OXY-1 System™, Impella XR Sheath™,
Impella BTRTM and preCARDIA devices, the expansion of our engineering
organization, continued investment in our

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clinical trials, most notably the STEMI DTU and PROTECT IV studies, and our focus on clinical, technological and quality initiatives for our products.

We expect research and development expenses to continue to increase as we continue to increase engineering, product development and clinical spending related to our initiatives to improve our existing products and develop new technologies and conduct clinical studies. Research and development expenses can fluctuate with project timing.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended September 30, 2021 increased by $23.6 million, or 30%, to $102.8 million from $79.2 million for the three months ended September 30, 2020.

Selling, general, and administrative expenses for the six months ended September 30, 2021 increased $58.7 million, or 40%, to $206.3 million from $147.6 million for the six months ended September 30, 2020.

Selling, general and administrative expenses increased from the three and six
months ended September 30, 2020 to the three and six months ended September 30,
2021 primarily due to increases in commercial hiring, marketing, clinical
training and education initiatives and higher stock compensation expense.

We aim to continue to invest strategically in hiring and sales and marketing activities, with a particular focus on training and education to drive utilization of our Impella devices and recovery awareness for acute heart failure patients.

Operating Income

Operating income for the three months ended September 30, 2021 decreased by $0.9
million, to $60.4 million, compared to $61.3 million operating income for the
three months ended September 30, 2020. Operating margin was 24.4% for the three
months ended September 30, 2021 compared to 29.2% for the three months ended
September 30, 2020. The decrease in operating income and margin was primarily
due to strategic investments in clinical, engineering, commercial, training and
marketing initiatives which increased operating expenses as described above.

Operating income for the six months ended September 30, 2021 decreased by $84.2
million, to $11.2 million, compared to $95.4 million operating income for the
six months ended September 30, 2020. Operating margin was 2.2% for the six
months ended September 30, 2021 compared to 25.5% for the six months ended
September 30, 2020. The decrease in operating income and margin was primarily
due to the preCARDIA acquisition in May 2021. The acquisition was accounted for
as an asset acquisition as substantially all of the fair value of the
acquisition related to the acquired in-process research and development
asset. Since the acquired technology platform is pre-commercial and has not
reached technical feasibility, the cost of the in-process research and
development asset was expensed, resulting in a charge of $115.5 million to the
condensed consolidated statements of operations for the six months ended
September 30, 2021.

Other Income

Other income decreased by $4.8 million, to other income of $6.8 million for the
three months ended September 30, 2021, compared to other income of $11.6 million
for the three months ended September 30, 2020. The decrease was primarily due to
the recognition of a $4.8 million gain from our investment in Shockwave Medical
for the three months ended September 30, 2021, compared to a $10.8 million gain
from our investment in Shockwave Medical for the three months ended September
30, 2020.

Other income, increased by $8.2 million, to other income of $46.8 million for
the six months ended September 30, 2021, compared to other income of $38.6
million for the six months ended September 30, 2020. This increase was primarily
due to a $21.0 million gain related to our previously owned minority interest in
preCARDIA recognized upon the acquisition of preCARDIA in May 2021 and a $22.4
million gain from our investment in Shockwave Medical for the six months ended
September 30, 2021, compared to a $34.7 million gain from our investment in
Shockwave Medical for the six months ended September 30, 2020.

Income Tax Provision

Our income tax provision was $10.3 million and $10.7 million for the three
months ended September 30, 2021 and 2020, respectively. Our effective tax rate
was 15.3% and 14.7% for the three months ended September 30, 2021 and 2020,
respectively. Our income tax provision was $27.5 million and $27.2 million for
the six months ended September 30, 2021 and 2020, respectively. Our effective
tax rate was 47.5% and 20.3% for the six months ended September 30, 2021 and
2020, respectively. The change in the effective tax rate for the six months
ended September 30, 2021 is primarily due to a non-deductible charge for
in-process research and development related to the preCARDIA acquisition offset
by an increase in excess tax benefits related to share-based compensation.

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Net Income

Net income for the three months ended September 30, 2021 was $57.0 million, or
$1.25 per basic share and $1.24 diluted share, compared to net income of $62.2
million, or $1.38 per basic share and $1.36 per diluted share, for three months
ended September 30, 2020.

Net income for the six months ended September 30, 2021, was $30.4 million, or
$0.67 per basic share and $0.66 per diluted share, compared to net income of
$106.8 million, or $2.37 per basic share and $2.34 per diluted share for the six
months ended September 30, 2020.

Liquidity and Capital Resources

As of September 30, 2021, our total cash, cash equivalents and marketable securities totaled $861.5 million, an increase of $13.7 million compared to $847.8 million at March 31, 2021. The increase in our cash, cash equivalents and marketable securities during the six months ended September 30, 2021 was primarily due to changes in working capital.

Following is a summary of our cash flow activities:

                                                              For the Six Months Ended
                                                                    September 30,
                                                            2021                  2020
Net cash provided by operating activities               $     115,931       $         108,968
Net cash used for investing activities                       (108,395 )               (81,314 )
Net cash used for financing activities                           (786 )               (14,711 )
Effect of exchange rate changes on cash                         2,422                  (3,043 )
Net increase in cash and cash equivalents               $       9,172       $           9,900

Cash Provided by Operating Activities

For the six months ended September 30, 2021, cash provided by operating
activities consisted of net income of $30.4 million, plus non-cash items of
$132.1 million offset by cash used in working capital of $46.6 million.
Adjustments for non-cash items consisted primarily of $115.5 million for
acquired preCARDIA in-process research and development, a $21.0 million gain
related to our previously owned minority interest in preCARDIA recognized upon
the acquisition of preCARDIA in May 2021, a $22.4 million change in fair value
of our investments in Shockwave Medical and other private medical technology
companies, $28.4 million of stock-based compensation expense, $13.9 million of
depreciation and amortization expense, $8.2 million in deferred tax provision,
$6.2 million in inventory and other write-downs, and $1.8 million in accretion
on marketable securities. The change in cash from working capital included a
$7.4 million decrease in accounts receivable due to timing of collections, a
$21.9 million decrease in accounts payable, accrued expenses and other
liabilities offset by a $20.3 increase in prepaid expenses and other assets and
a $11.7 increase in inventory due to the mix of customer demand and production.

For the six months ended September 30, 2020, cash provided by operating
activities consisted of net income of $106.8 million, adjustments for non-cash
items of $19.7 million and cash used in working capital of $17.5 million. As
discussed above, the change in net income was primarily due to modest increases
in Impella revenue, lower selling, general and administrative expenses to
reduced discretionary spending and hiring and gains from our investment in
Shockwave Medical, partially offset by increases in research and development
expenses due to product development and clinical initiatives relating to our
existing and pipeline products and lower excess tax benefits. Adjustments for
non-cash items consisted primarily of $20.9 million of stock-based compensation
expense, $14.2 million in deferred tax provision, $11.1 million of depreciation
and amortization expense, $3.1 million in inventory and other write-downs, and
$0.5 million in accretion on marketable securities. The change in cash from
working capital included a $4.8 million decrease in accounts receivable due to
timing of collections, a $6.1 million decrease in inventory due to lower
production volumes, a $32.1 million decrease in accounts payable and accrued
expenses primarily due to payment of annual bonuses during the quarter ended
September 30, 2020, and a $2.0 million increase in deferred revenue.

Cash Used for Investing Activities

For the six months ended September 30, 2021, net cash used for investing
activities primarily consisted of $82.8 million for our acquisition of
preCARDIA, $3.9 million for our investment in private medical technology
companies, $7.3 million in purchases of marketable securities (net of sales),
and $14.4 million for the purchase of property and equipment primarily related
to continued expansion of manufacturing capacity, office space and research
development facilities in Danvers and Aachen, Germany.

For the six months ended September 30, 2020, net cash used for investing
activities primarily consisted of $74.4 million in purchases from the sale of
marketable securities (net of maturities), $52.2 million in net cash for our
acquisition of Breethe and $19.6 million used in the purchase of property and
equipment primarily related to continued expansion of manufacturing capacity,
office space and research development facilities in Danvers and Aachen, Germany.
We also made an additional $3.1 million investment in a

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private medical technology companies. These amounts were partially offset by $67.9 million in proceeds from the sale of Shockwave Medical securities.

Capital expenditures for fiscal year 2022 are estimated to range from $30
million to $40 million to support the long-term development of our business,
including manufacturing capacity, building expansions in our Danvers and Aachen
facilities and information systems development projects.

Cash Used for Financing Activities

For the six months ended September 30, 2021, net cash used for financing activities included $12.1 million in payments in lieu of issuance of common stock for payroll withholding taxes upon vesting of certain equity awards. These amounts were offset by $8.4 million in proceeds from the exercise of stock options and $3.0 million in proceeds from the issuance of stock under the employee stock purchase plan.

For the six months ended September 30, 2020, net cash used for financing
activities included $11.3 million for the repurchase of our common stock and
$10.9 million in payments in lieu of issuance of common stock for payroll
withholding taxes upon vesting of certain equity awards. These amounts were
offset by $5.6 million in proceeds from the exercise of stock options and $2.0
million in proceeds from the issuance of stock under the employee stock purchase
plan.

Operating Capital Resources and Liquidity Requirements

Our sources of cash liquidity are primarily from existing cash and cash
equivalents, marketable securities and cash flows from operations. On
September 30, 2021, our total cash, cash equivalents, and short and long-term
marketable securities totaled $861.5 million, an increase of $13.7 million
compared to $847.8 million at March 31, 2021. Marketable securities at
September 30, 2021 consisted of $619.7 million held in funds that invest in U.S.
Treasury securities, government-backed securities, corporate debt securities and
commercial paper. We generated operating cash flows of $115.9 million and $109.0
million for the six months ended September 30, 2021 and 2020, respectively. At
September 30, 2021, we had no debt outstanding. We believe that our sources of
liquidity are sufficient to fund the current requirements of working capital,
capital expenditures, and other financial commitments for at least the next
twelve months.

Our primary liquidity requirements are to fund the following: expansion of our
commercial and operational infrastructures; expansion of our manufacturing
capacity and office space; the procurement and production of inventory to meet
customer demand for our Impella devices; funding of new product and business
development initiatives, such as the recent acquisitions of preCARDIA and
Breethe; ongoing commercial launch in Japan and expansion into potential new
markets; increased clinical spending; legal expenses related to ongoing patent
litigation and other legal matters; stock repurchases and payments in lieu of
issuance of common stock for payroll withholding taxes upon vesting of certain
equity awards and provide for general working capital needs. To date, we have
primarily funded our operations through product sales and the sale of equity
securities.

Our liquidity is influenced by our ability to sell our products in a competitive
industry and our customers' ability to pay for our products. Factors that may
affect liquidity primarily include our ability to penetrate the market for our
products, our ability to maintain or reduce the length of the selling cycle for
our products, our capital expenditures, and our ability to collect cash from
customers after our products are sold. We continue to review our short-term and
long-term cash needs on a regular basis.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements or guarantees of third-party
obligations during the periods presented. An "off-balance sheet arrangement"
generally entails a transaction, agreement or other contractual arrangement to
which an entity unconsolidated with us, is a party under which we have any
obligation arising under a guarantee contract, derivative instrument or variable
interest or a retained or contingent interest in assets transferred to such
entity or similar arrangement that serves as credit, liquidity or market risk
support for such assets.

Contractual Obligations and Commercial Commitments

We have various contractual obligations, which are recorded as liabilities in
our condensed consolidated financial statements. Other items are not recognized
as liabilities in our condensed consolidated financial statements but are
required to be disclosed. There have been no material changes, outside of the
ordinary course of business, to our contractual obligations as previously
disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31,
2021.

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