Abiomed Annual Report 2009

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FY2009 Annual Report · Abiomed

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Annual Report

for ﬁ scal year ended

March 31, 2009

Moving
forward
with
Impella
and heart
recovery

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Creating

breakthrough heart support

technologies, enabling

safer revascularization ,

heart recovery , and

cost-effective patient care

• World’s smallest heart
pumps that replicate
the natural function
of the heart

• Demonstrated safety
proﬁ le; potentially
reduces adverse events
during risky procedures

• Goal of heart recovery is
to salvage heart muscle
and keep patient alive
with native heart

• Heart recovery reduces
healthcare costs (less
heart surgery, fewer heart
transplants, minimizing
chronic care) while
improving patients’ quality
of life

“ The Impella 2.5 is poised to change the standard of care in our efforts to

combat heart disease and its devastating after-effects. The PROTECT I trial
enrolled a very sick patient population and demonstrated that the device
works and validated its impressive safety proﬁ le, showing no valve, blood
or vascular damage, no instances of stroke and a low adverse event rate.”
Igor F. Palacios, M.D.
Director of Interventional Cardiology
Massachusetts General Hospital*
Associate Professor of Medicine at Harvard University Medical School

*Massachusetts General Hospital is ranked #4 on the
US News & World Report list of Top 50 Heart Hospitals

OFFICES
Abiomed, Inc.
22 Cherry Hill Drive
Danvers, Massachusetts 01923, USA 52074 Aachen, Germany
Voice: +49 (241) 8860-0
Phone: (978) 777-5410
Facsimile: +49 (241) 8860-111
Fax: (978) 777-8411
Email: ir@abiomed.com

Abiomed Europe GmbH
Neuenhofer Weg 3

NASDAQ GLOBAL MARKET
Trading symbol: ABMD

DIVIDENDS
The Company has never paid any cash dividends on its capital stock and does
not plan to pay any cash dividends in the foreseeable future. The current policy
of the Company is to retain our cash ﬂ ows and any future earnings to ﬁ nance
future growth.

AVAILABLE PUBLICATIONS
The Company’s annual report is distributed regularly to stockholders. Additional
publications are available to stockholders, including the Company’s annual report
on Form 10-K, and quarterly reports on Form 10-Q, as ﬁ led with the Securities
and Exchange Commission, news releases issued by the Company and brochures
on speciﬁ c products. Such publications are available on our website at www.
abiomed.com or by writing us at:

Abiomed, Inc.
22 Cherry Hill Drive
Danvers, Massachusetts 01923, USA

TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038, USA

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
200 Berkeley Street
Boston, Massachusetts 02116, USA

FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain statements in this annual report, including statements made in the letter to the
shareholders, employees, customers and their patients, narrative text, captions and graphics,
constitute “forward-looking statements,” such as statements regarding the Company’s plans,
objectives, expectations and intentions. These statements can often be identiﬁ ed by the use
of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,”
“believe,” “plan,” “intend,” “could,” “estimates,” “is being,” “goal,” “schedule” or other
variations of these terms or comparable terminology. All forward-looking statements involve
risks and uncertainties. The Company’s actual results may differ materially from those anticipated
in these forward-looking statements based upon a number of factors, including uncertainties
associated with development, testing and related regulatory approvals, anticipated future losses,
complex manufacturing, high quality requirements, dependence on limited sources of supply,
competition, technological change, government regulation, future capital needs and uncertainty
of additional ﬁ nancing, and other risks and challenges detailed in the Company’s ﬁ lings with
the Securities and Exchange Commission, including the Annual Report ﬁ led on Form 10-K for
the Company’s ﬁ scal year ended March 31, 2009. Readers are cautioned not to place undue
reliance on any forward-looking statements, which speak only as of the date of this annual
report. The Company undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reﬂ ect any changes in the Company’s
expectation, or events or circumstances that occur after the date of this annual report or to reﬂ ect
the occurrence of unanticipated events.

EXECUTIVE OFFICERS

Michael R. Minogue
Chairman, President and Chief Executive Ofﬁ cer

Robert L. Bowen
Vice President and Chief Financial Ofﬁ cer

David Weber, Ph.D.
Chief Operating Ofﬁ cer

William J. Bolt
Senior Vice President, Engineering
Quality and Regulatory Affairs

Andrew J. Greenﬁ eld
Vice President, Healthcare Solutions

Michael G. Howley
Vice President, General Manager of
Global Sales and Marketing

BOARD OF DIRECTORS

Michael R. Minogue
Chairman, President and Chief Executive Ofﬁ cer

W. Gerald Austen, M.D.
Edward D. Churchill Professor of Surgery,
Harvard Medical School and the
Massachusetts General Hospital

Ronald W. Dollens
Retired Chief Executive Ofﬁ cer and President,
Guidant Corporation

Louis E. Lataif
Dean of the Boston University
School of Management

Desmond H. O’Connell, Jr.
Former Chairman, Serologicals Corporation;
Management Consultant

Dorothy E. Puhy
Lead Director, Abiomed Board of Directors;
Executive Vice President, Chief Financial Ofﬁ cer and
Assistant Treasurer, Dana-Farber Cancer Institute, Inc.

Eric A. Rose, M.D.
Former Chairman of Columbia University
Department of Surgery,
Chief Executive Ofﬁ cer and Chairman of the Board,
SIGA Technologies, Inc.

Martin P. Sutter
Managing Director, Essex Woodlands Health Ventures

Henri A. Termeer
Chairman, Chief Executive Ofﬁ cer and President
Genzyme Corporation

All content in this document is for information purposes only, and is not intended to provide speciﬁ c instructions to hospitals or physicians on how to bill for medical procedures. Hospitals and physicians should consult appropriate
insurers, including Medicare ﬁ scal intermediaries and carriers for speciﬁ c coding, billing and payment levels. This document represents no promise or guarantee by Abiomed, Inc. concerning medical necessity, levels of payment,
coding, billing or coverage issues.

Nothing in this document shall be construed to encourage or require any healthcare provider or institution to provide inpatient, outpatient or any other services to patients, to order any goods or services from Abiomed, Inc., or
otherwise generate business for Abiomed, Inc. Customers utilizing this information should not knowingly or intentionally conduct themselves in a manner so as to violate the prohibition against fraud and abuse in connection with
federal or state healthcare programs.

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REGULATORY APPROVALS/CLEARANCES*

FDA

CE Mark†

BVS 5000

November 1992
PMA

April 1998

AB5000

Abiocor

IABP

April 2004
PMA

October 2003

September 2006
HDE

N/A

COMPANY
FISCAL HIGHLIGHTS‡

Total Revenue

24%

$73
$

16%

$59
$59

16%

$51
$51

28%

$44
$44

48%

$38$

December 2006
510(k)

January 2007

2005
2005

2006
2006

2007
2007

2008
2008

2009
2009

Gross
Margin

75%

73%

76%

74%

72%

iPulse Console

December 2007
PMA

January 2007

Total Impella Revenues

Impella 2.5

June 2008
510(k)

September 2004

AB Portable Driver

March 2009
PMA

March 2008

195%

$
$36

186%

76%

$12
$12

$4 $4

2007
2007

2008
2008

2009
2009

Impella 5.0

April 2009
510(k)

January 2003

Cash and Marketable
Securities

Impella LD

April 2009
510(k)

June 2002

Cumulative FDA Approved/Cleared Products

2005

2006

2007

2008

2009

Cash Raised Through
Financing Activities

Cash Balance at
End of Fiscal Year

$75

$67

$38

$61

$46

2007
2007

2008
2008

2009
2009

Note: Cash balance includes cash
and marketable securities

*Based on calendar year.
†European certiﬁ cation for regulatory approval.

‡Based on ﬁ scal year ending March 31.

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6/24/09 12:33 PM

RECENT KEY MILESTONES

• June 2, 2008 Impella® 2.5 receives FDA 510(k)

clearance

• August 22, 2008 Abiomed raises $42 million with

public stock offering

• September 30, 2008 Impella 2.5 purchased by over

100 U.S. hospitals for general use

• October 13, 2008 Six Impella papers presented
at Transcatheter Cardiovascular Therapeutics (TCT)
2008 meeting, where Impella 2.5 was showcased and
attracted more than 300 attendees at Abiomed evening
symposium

• October 13, 2008 Europella registry results presented
by Sjauw, et al; at TCT 2008. Europella is a European,
multi-center study on 144 high-risk PCI patients

Dear Stakeholders:

In ﬁ scal year 2009, we focused on our
stated corporate goals, beginning with
the June commercial launch of Impella
2.5. First, in just four months after
receiving FDA 510(k) clearance, we
quickly surpassed our goal by reaching
over 100 Impella customers and over 100
patients supported. Second, we prepared
for the anticipated Impella demand by
expanding our manufacturing capacity
and increasing our yields. Third, we
moved towards proﬁ tability by meeting
our ﬁ scal budget, decreasing our cash
burn, raising an additional $42 million
in cash through a stock offering, and
maintaining our no debt balance sheet.
Finally, we increased revenues for the
full year by 24% to $73 million with solid
gross margins of 72 percent.

As of March 31, 2009, 521 patients
were supported by Impella in 229 U.S.
hospitals. In fact, our U.S. ﬁ eld team
supported more patients in the fourth
quarter than the prior seven months
combined. This was up 63% sequentially
from 160 patients during the third
quarter and up 161% from 100 patients
during the second quarter. Customer
satisfaction and adoption continue to
grow with every patient supported.
Pertaining to the PROTECT II study, a
total of 95 hospitals are participating
in the study and a total of 223 patients
were enrolled at the end of the ﬁ scal
year. We have reached 34% of the
654 patients required for this FDA
superiority study randomizing Impella
against an intra-aortic balloon pump
(IABP). This past year, we shifted focus
from heart surgery to cardiology, while
preparing for the future with four
ongoing FDA clinical trials.

We leveraged the Impella customer
demand into strong sales of $36 million,

195%

from the prior year. Our four

up
regulatory announcements covering
Impella 2.5, Impella 5.0, Impella LD
and the AB Portable Driver, and precise
attention to our company goals,
allowed for rapid adoption of a new
product line during an extraordinarily
challenging economic time. Overall, we
executed on our vision to create and
navigate several products from concept
to regulatory clearance.

I am proud of the entire team for their
efforts and results—from the regulatory
clearance of Impella 2.5 in June, to the
manufacturing ramp, to the sales and
clinical performance to support over 500
U.S. patients. This growth was the result
of our planned shift in resources to the
interventional cardiology segment. Our
ﬁ eld team is growing and our product
line is ﬂ ourishing as we continue to
generate evidence-based studies on the
science of circulatory support; a science
that Abiomed helped create over the last
25 years.

In ﬁ scal 2009, it was time for the
Impella 2.5 U.S. commercial launch.
Impella has gained support and
advocacy from esteemed physicians
due to its revolutionary design in safely
supporting stable hemodynamics.
Now, it is time to move forward and
educate physicians and patients on the
importance of circulatory support to
enhance treatment options.

As a company, our mission is to
create breakthrough heart support
technologies, enabling safer
revascularization, heart recovery
and cost-effective patient care. Our
breakthrough technologies are derived
from our intellectual property around
minimally invasive, safe and easy to

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6/23/09 2:09 PM

• November 11, 2008 Abiomed announces record revenue
of $20 million, representing 75% growth for second quarter
of ﬁ scal 2009 and total Impella revenue of $10.5 million
within ﬁ rst full quarter of 510(k) clearance

• March 11, 2009 Journal of the American College of

Cardiology publishes PROTECT I study results for Abiomed
Impella 2.5 and showcases results at American College
of Cardiology (ACC) Annual Meeting in Orlando, later in
the month

• March 30, 2009 FDA approves Abiomed’s new
AB Portable™ Driver. On April 20, 2009, Abiomed
discharged ﬁ rst AB Portable Driver patient home in
Voyager home discharge trial

• April 22, 2009 Abiomed receives FDA 510(k)

clearance for Impella 5.0 and Impella LD

use heart pumps designed to protect and
recover heart muscle. Impella support may
provide safer revascularization that expands
treatment options to high- risk patients
by potentially preventing hemodynamic
collapse. Additionally, scientiﬁ c evidence
has proven that salvaging heart muscle
after a heart attack improves the heart’s
ability to pump blood, which improves the
quality of life for the patient.

In ﬁ scal 2010, Abiomed will focus on
the demand and growth of our Impella
product line for general use. Our ﬁ scal 2010
corporate goals are:

1. Increasing Impella 2.5 patient utilization

and expanding clinical usefulness;

2. Continually improving Impella’s ease
of use and reducing Impella implant
time through training and product
enhancements;

3. Growing shareholder value through

execution of our business plan for both
cardiology and surgery; and

4. Driving operational excellence in product
quality, customer service and ﬁ nancial
processes.

Growing shareholder value is a key
company principle. We believe the Impella
platform will be at the core of our success
due to an aging population and the need
for hemodynamic support during complex
procedures. Percutaneous Coronary
Intervention (PCI) remains the leading
minimally invasive heart procedure for
patients. According to the American Heart
Association (AHA), in 2006, more than 1.3
million PCI procedures were performed.
Independent surveys suggest that
approximately 28,000 of these patients are
supported per year with an IABP. There are
other patients who have limited alternatives

because they are deemed too risky for
open-heart surgery (coronary artery bypass
graft or CABG) and PCI, or for personal
reasons, refuse to have the invasive
surgery. Impella potentially reduces adverse
events during these risky procedures and
may potentially provide new options for
high-risk patients. In 2006, according
to the AHA, PCI costs averaged $48,000
per patient, while CABG costs averaged
$100,000 per patient.

Based on additional data, heart attacks
remain one of the leading causes of in-
hospital mortality, and patient mortality
for cardiogenic shock remains greater than
50%. According to the American Heart
Association 2008 Statement of Principles
for healthcare reform, there were 1.5
million heart attacks, totaling $31 billion
in hospital charges, and causing 452,000
deaths in the United States. More than
120,000 women die in the hospital from
a heart attack every year, according to
WomenHeart.org.

Heart attacks, high-risk heart procedures,
and salvaging heart muscle will remain a
clinical priority for years to come and we
believe heart recovery is the most cost-
effective treatment for these patients. Today,
our company has never been stronger, with
high customer demand for our products, a
deep intellectual property portfolio, proven
regulatory expertise, and our expanded
commercial reach. The time for Impella and
heart recovery is now and Abiomed moves
forward with great conﬁ dence in our future.

Thank you for your support.

Michael R. Minogue
Chairman, President and Chief Executive Ofﬁ cer

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6/23/09 2:09 PM

Impella® 2.5

Dan Wolpert had a family history
of heart attacks. Yet, on September
11, 2008, when he drove himself to
UMass Memorial Medical Center in
Worcester, Mass., he wasn’t quite
sure that he was experiencing
heart attack symptoms until he
collapsed at the emergency room
door. Diagnosing Dan with an acute
myocardial infarction, or a heart
attack, the clinical staff resuscitated
him three times and then took him
to the catheterization lab to insert
Impella® 2.5, which supported him for
24 hours. Dan was in the ICU for nine
days before being discharged from the
hospital. Dan has fully recovered his
own heart, and as shown on the cover,
now enjoys a more active lifestyle.

“ Impella 2.5 provides a new paradigm to help recover muscle for heart
attack patients. In Dan’s case, he quickly received treatment from the
staff at UMass Memorial and with Impella, we were able to rapidly
and effectively improve his cardiac output, minimize heart damage,
and perfuse vital organs.”

Dan Fisher, M.D., Ph.D
Department of Medicine
Division of Cardiovascular Medicine
UMass Memorial Medical Center

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6/23/09 2:04 PM

High-Risk
PCI

AMI

68%
of total
patients

15%
of total
patients

Cardio-
myopathy
(Acute Decomp.)

6%
of total
patients

All
Other
(Viral,
Post transplant,
Post partum)

7%
of total
patients

Post
Surgery

4%
of total
patients

>500 Patients
Reported Use by U.S. Hospitals

Use Proﬁ le of Impella Technology*

*June 2008 to April 2009
Voluntary hospital patient reporting, data on ﬁ le – Impella 2.5 FDA
cleared for partial circulatory support for up to 6 hrs June 2008

“ Impella’s rapid adoption and training in the U.S. has demonstrated its
remarkable ease of use, and efﬁ cacy in treating patients during high-
risk interventions. As a result of these crucial features, Impella has
truly become a mainstay of hemodynamic support for cath labs across
the country.”

William O’Neill, M.D.
Executive Dean for Clinical Affairs at the University of Miami
and the National Principal Investigator of the pilot studies for Impella 2.5

35581txt.indd 5

6/22/09 8:01 PM

Impella® 5.0

In October 2008, Sikander Sahota, 13, (shown below), was diagnosed
with viral myocarditis, an inﬂ ammation that affects the myocardium, or
heart muscle, and kills one-third of patients, while leaving another third
needing a heart transplant. One of Canada’s leading surgeons, Anson
Cheung, M.D., Surgical Director of Heart Transplantation at St. Paul’s
Hospital in Vancouver, British Columbia, used the Impella 5.0 to recover
Sikander’s failing heart. Just days after the procedure, Sikander was up
and walking. He was even given permission by Dr. Cheung to return to
playing soccer.

“ Impella has revolutionized the treatment for acute heart failure,

caused by conditions like AMI, cardiogenic shock and myocarditis.
Because of its tiny size, it can be implanted minimally invasively.
It is less risky for the patient, buys time for heart recovery and
avoids further damage to the heart muscle.”

Anson Cheung, M.D.
Surgical Director of Heart Transplantation,
St. Paul’s Hospital
(Pictured above at left)

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6/22/09 8:03 PM

Breakthrough Technology –
World’s Smallest Heart Pumps

The Impella catheter-based pumps are

minimally invasive and are designed to

provide temporary circulatory support and

reduce the workload of the heart muscle.

The pumps are approximately the size of

a pencil with a small nine French catheter.

The two newest additions to the Impella

portfolio, the Impella 5.0 and Impella LD,

provide up to ﬁ ve liters of blood ﬂ ow per

minute, a ﬂ ow rate typically adequate to

fully support the average adult. These new

products further enhance Abiomed’s heart

recovery portfolio, providing cardiologists

IMPELLA 2.5 PATENT COVERAGE

The Impella portfolio includes
55 patents and utility models
worldwide (expirations ranging
from 2017 to 2025), with
approximately 40 applications
pending. This includes 17 U.S.
patents (expirations ranging
from 2017 to 2023), with four
h four
U.S. applications pending.
pp ications pendding.

4 “pigtail” patents and
applications
(expiring 2023 and 2024)

1 “guidewire – over the
wire and monorail” patent

4 cannula patents and
applications
(expiring 2017 and 2018)

Impella 2.5

15 motor patents
and applications
(expiring 2019, 2020,
and 2021)

3 pressure sensor
patents and
applications
(expiring 2018)
(expiring 2018)

and surgeons with the clinical ﬂ exibility to

Impella 5.0

s
select and deploy circulatory support devices

based on the severity of cardiac dysfunction

and the amount of ﬂ ow needed, as well as

the preferred implant approach.

Impella LD

Products shown actual size

“ Impella 5.0 is a powerful tool that signiﬁ cantly helps recover profound
ver profound
n
cantly helps recove
iﬁ c
viously at a
A
. As I reported prev
cle.
shock patients and preserve heart muscle. As I reported previously at a
t
l
i
83% vival rate
y
very positive 83% survi
preliminary analysis, Impella 5.0 had a very positive 83% survival rate
VER I trial.
rv
ll survivors in the RECOV
after 30 days with heart recovery for all survivors in the RECOVER I trial.
proﬁ le for
a
ted an excellent safety proﬁ le for
The preliminary results also demonstrated an excellent safety proﬁ le for
the Impella 5.0 in the surgical setting.”

iti

B tl G ifﬁth M D
Bartley Grifﬁ th, M.D.
Chief of Cardiac Surgery and Heart & Lung Transplantation at the University of Maryland School of Medicine,
Impella 5.0 user and Principal Investigator of the RECOVER I study for Impella 5.0

35581txt.indd 7

6/23/09 5:48 PM

AB5000™

On the morning of March 27, 2008, Scarlette Harper
woke up gasping for breath. An active adult who
walked every day and had no prior history of heart
complications, Scarlette wasn’t sure what was
wrong, but knew it was serious. Doctors discovered
that Scarlette had viral myocarditis, which led to
a precipitous decline in cardiac function. Despite
inotropic drugs and IABP support, Scarlette continued
to deteriorate, and both sides of her heart began to
fail. As she slipped further into cardiogenic shock,
Scarlette’s surgeons at Piedmont Hospital in Atlanta,
decided to implant the AB5000™ BiVAD Ventricles.
Now Scarlette has fully recovered her heart and
returned to graduate school to complete her degree
in Human Relations.

The Abiomed AB5000
provides temporary
support for one or both
t in
sides of the natural heart in
circumstances where the heart
heart
tient’s
has failed, giving the patient’s
rest and
heart the opportunity to rest and
pleed wd withith ththhe e e
potentially recover. Coupled with the
AB Po Portableb
recently FDA-approved AB Portable
ddes high pulsatile
Driver, the AB5000 provides high pulsatile
ﬂ ows, the ability to ambulate the patient and the
ﬂ exibility for bi-ventricular support, contributing to
improved clinical outcomes for the patient.

“ The AB5000 treats a very sick patient population and helps to stabilize and

protect their organs by restoring blood ﬂ ow throughout the body. A fantastic
young wife and mother, Scarlette was struck down in her prime by viral
myocarditis, but with the profound technology behind the AB5000 and the
combined team effort, she was able to recover her heart and return to her busy
and productive life. We feel honored to be involved with this technology and
especially, in the care of Scarlette Harper.”

John Gott, M.D.
Cardiothoracic Surgeon
Piedmont Hospital, Atlanta

35581txt.indd 8

6/22/09 8:03 PM

AB Portable Driver™

On February 2, 2009, Jim Hathcock received a quadruple bypass.
Post-operation, his right ventricle began to fail and he was immediately
transferred to Tampa General Hospital to be placed on the Abiomed
AB5000 Ventricle. After one and a half months on the AB5000, Jim was
placed on the AB Portable Driver and enrolled in the Voyager trial, the
Abiomed FDA trial which evaluates the safety and performance of the
AB Portable Driver System in the outpatient environment. Jim, who runs
his own trucking company out of his home ofﬁ ce, was discharged home
on April 20, 2009, to give him time to recover his heart. He is already
showing signs of recovery in his right ventricle and doctors expect to
explant the AB5000 soon.

Abiomed received FDA approval for the AB Portable Driver on March
22, 2009. The AB Portable Driver offers full Bi-Ventricular Assist Device
(BiVAD) functionality. The new driver is designed to enhance the clinical
utility of the Abiomed AB5000 Ventricle by delivering
direct beneﬁ ts to both the hospital staff and patients
by increasing mobility and versatility without
compromising performance. Offering hemodynamic
support from the operating room through the weaning
process, the powerful self-contained driver allows a
quiet and minimally intrusive recovery that enables remote
diagnostics for even the sickest patients, and gives them the potential
opportunity to return home sooner.

“ The AB Portable Driver grants patients the
mobility and versatility that allows them to
restore their quality of life while recovering
their hearts. With its lightweight and compact
design, it provides quiet and full BiVAD support
while enabling patients more mobility and
transportation options while being treated with
the AB5000.”

Cedric Shefﬁ eld, M.D.
Cardiothoracic Surgeon,
Tampa General Hospital*

*Tampa General Hospital is ranked #42 on the
US News & World Report list of Top 50 Heart Hospitals

35581txt.indd 9

6/22/09 8:04 PM

Scientiﬁ c Evidence and Clinical Applications

Indication

Estimated # of
U.S. IABPS in 2009*

Studies

• Henriques, et al; Journal of the American College of Cardiology, 2006
• PROTECT I, Dixon, et al; Journal of the American College of Cardiolgy, 2009
• Burzotta, et al; Journal of Cardiovascular Medicine, 2008
• Europella, Henriques, et al; presented at TCT in October 2008 and pending as a published article in the

High Risk PCI

28,000

Journal of the American College of Cardiology

Pending:
• PROTECT II: A prospective, multi-center, randomized controlled trial of Impella 2.5 vs. IABP in high-risk PCI,

analyzing a total of 654 patients

• Abiomed Registry

• Mach II, Sjauw, et al; Journal of the American College of Cardiolgy, 2008
• ISAR SHOCK, Seyfarth, et al; Journal of the American College of Cardiolgy, 2008
• Meyns, et al; Journal of the American College of Cardiolgy, 2003
• IABP Meta-analysis, Henriques, et al; European Heart Journal, 2009
• PAMI II, Stone, et al; Journal of the American College of Cardiology, 1997
• Fincke R, et al; Journal of the American College of Cardiology, 2004

Pending:
• RECOVER II: A prospective, multi-center, randomized controlled trial of Impella 2.5 vs. IABP in AMI, analyzing

a total of 384 patients

• Impress: A multi-center, randomized trial of the Impella 2.5 versus IABP therapy for large anterior acute ST-

elevation myocardial infarction patients treated with primary PCI, analyzing a total of 150 patients

• Abiomed Registry

AMI

30,000

Acutely
Decompensating
Chronic
Heart Failure

18,000

Pending:
• Recompensate: Studies will evaluate the therapeutic beneﬁ ts of unloading the heart for chronic patients.

These studies will utilize diagnostic imaging.

• Abiomed Registry

• Samuels, et al; Journal of Thoracic and Cardiovascular Surgery, 1999
• Siegenthaler, et al; Journal of Thoracic and Cardiovascular Surgery, 2004

Off Pump/
Minimally
Invasive/Wean

33,000

Pending:
• RECOVER I: A clinical safety and feasibility study that demonstrates the safety and potential effectiveness

of Impella 5.0 for post-cardiotomy patients who require hemodynamic support after weaning from
cardiopulmonary bypass machine.

• Abiomed Registry

* Medtech Insight: Current and Emerging Technologies for the Management of Heart Failure in the U.S., March 2007

Cohen M and al., Intra-Aortic Balloon Counterpulsation in US and Non-US Centers: Results of the Benchmark Registry. Eur Heart J. 2003 Oct;24(19):1763-70.

Preserving Muscle/
Reducing the Infarct

Why We Believe Impella
is Superior to IABP

Cardiogenic Shock

IABP

Impella

O2 Supply
and Demand

Patient Case Study**

IMPELLA OFF

INFARCT

Animal Study with Infarct Risk

INFARCT
with revascularization only

INFARCT
with revascularization AND
unloading from Impella

Direct Heart
Unloading
reducing O2
demand on heart

Supporting
Coronary Flow
increasing O2
supply to heart

Increasing
Cardiac Power
increasing O2 supply
to all organs, the
highest correlate to
decreasing mortality

Under-perfused area puts
muscle at risk

IMPELLA ON

Impella increases blood supply

** Aqel, et al., submitted for publication, January 2009

35581txt.indd 10

6/22/09 8:04 PM

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K

(Mark One)
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For fiscal year ended March 31, 2009
OR

For the transition period from

Commission File Number: 0-20584
ABIOMED, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

22 Cherry Hill Drive
Danvers, Massachusetts
(Address of Principal Executive Offices)

04-2743260
(I.R.S. Employer
Identification No.)

01923
(Zip Code)

(978) 646-1400
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Common Stock, $.01 par value

Name of Each Exchange
on Which Registered
The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ‘ No È
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ‘ No È
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 È 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 ‘ No ‘

Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K È

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):

Large accelerated filer ‘
Non-accelerated filer ‘
(Do not check if a smaller reporting company)

Accelerated filer È
Smaller reporting company ‘

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ‘ No È
The aggregate market value of the registrant’s common stock as of September 30, 2008, held by non-affiliates of the registrant (without admitting that
any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the common stock was last sold as of
such date was $649,874,573.

As of May 29, 2009, 37,350,501 shares of the registrant’s common stock, $.01 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for Abiomed, Inc.’s 2009 Annual Meeting of Stockholders, which is scheduled to be filed within 120 days

after the end of Abiomed, Inc.’s fiscal year, are incorporated by reference into Part III (Items 10, 11, 12, 13 and 14) of this Form 10-K.

SPECIAL NOTE REGARDING 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. We have based these forward-looking statements on our current expectations and
projections about future events. Our actual results could differ materially from those discussed in, or implied by, these forward-looking
statements. Forward-looking statements are identified by words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “may” and other
similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. Forward-looking statements in these documents include, but are not necessarily limited to,
those relating to:

•

our ability to obtain and maintain regulatory approval both in the U.S. and abroad for our existing products as well as for new
products in development;

the ability of patients using our products to obtain reimbursement of their medical expenses by government healthcare programs
and private insurers including potential changes to current government and private insurers’ reimbursements;

the other competing therapies that may in the future be available to heart failure patients;

our plans to develop and market new products and improve existing products;

the potential markets that exist or could develop for our products and products under development;

our business strategy;

our revenue growth expectations and our goal of achieving profitability; and

the sufficiency of our liquidity and capital resources.

Factors that could cause actual results or conditions to differ from those anticipated by these and other forward-looking statements
include those more fully described in the “Risk Factors” section set forth in Part I, Item 1A and elsewhere in this report. In light of these
assumptions, risks and uncertainties, the results and events discussed in the forward-looking statements contained in this report or in any
document incorporated by reference might not occur. You are cautioned not to place undue reliance on any forward-looking statements, which
speak only as of the date of this report or the date of the document incorporated by reference. We do not undertake any obligation to update or
alter any forward-looking statements whether as a result of new information, future events or otherwise. All subsequent forward-looking
statements attributable to us or to any person acting on our behalf are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section.

ITEM 1. BUSINESS

Overview

PART I

We are a leading provider of medical devices in circulatory support and we offer a continuum of care in heart recovery to heart failure
patients. Our strategy is focused on establishing heart recovery as the goal for all acute cardiac attacks. Our products are designed to enable
the heart to rest, heal and recover by improving blood flow and/or performing the pumping function of the heart. We believe we are the only
company with commercially available cardiac assist devices approved for heart recovery from all causes by the U.S. Food and Drug
Administration, or FDA, and our products have been used to treat thousands of patients to date. Our products have been used globally in a
broad range of clinical settings, including by heart surgeons for patients in profound shock and by interventional cardiologists for patients who
are in shock, pre-shock or in need of prophylactic support in the cardiac catheterization lab, or cath lab. Our circulatory care products are
designed to provide hemodynamic support for acute patients from the cath lab to the surgery suite aimed towards heart recovery and sending
the patient home with his or her native heart. We believe heart recovery is the optimal clinical outcome because it allows patients to return
home with their own hearts, ultimately restoring their quality of life. In addition, we believe heart recovery is the most cost-effective path for
the healthcare system. Since 2004, our executive team has focused our efforts on expanding our product portfolio. We have significantly
increased our portfolio to several circulatory care products that have either been approved or cleared by the FDA in the U.S., have received
CE mark approval in Europe, or have received registration or regulatory approval in numerous other countries. We also have additional new
circulatory care products under development.

Industry Background

Heart Disease—Overview

According to the American Heart Association, or AHA, 2007 Heart Disease Update Report, there are an estimated 865,000 heart attack

patients treated annually at U.S. hospitals. The AHA has also reported that coronary heart disease is the leading cause of death in the U.S.
Coronary heart disease is a condition of the coronary arteries that causes reduced blood flow and insufficient oxygen delivery to the affected
portion of the heart. Coronary heart disease leads to acute myocardial infarction, or AMI, commonly known as a heart attack, which may lead
to heart failure, a condition in which the heart is unable to pump enough blood to the body’s major organs. The AHA estimates that there are
approximately 2.0 million hospital visits per year with coronary heart disease as the first-listed diagnosis and approximately 1.1 million
hospital visits per year with congestive heart failure as the first-listed diagnosis. Approximately 267,000 women die each year in the U.S.
from heart attacks, which is approximately six times as many as women who die from breast cancer annually.

A broad spectrum of therapies exists for the treatment of patients in early stages of coronary heart disease. Angioplasty procedures and
stents are commonly used in the cath lab to restore and increase blood flow to the heart. These treatments are often successful in slowing the
progression of heart disease, extending life, and/or improving the quality of life for some period of time. Patients presenting with acute cardiac
injuries have potentially recoverable hearts. Treatment for these patients in pre-shock in the cath lab is primarily focused on hemodynamic
stabilization. Acute heart failure patients in profound shock typically require treatment in the surgery suite. These are patients suffering from
cardiogenic shock after a heart attack, post-cardiotomy cardiogenic shock or myocarditis complicated with cardiogenic shock. Chronic heart
failure patients have hearts that are unlikely to be recoverable due to left and/or right side heart failure and their conditions cause a heart to fail
over time. Limited therapies exist today for patients with severe, end-stage, or chronic heart failure.

In more severe cases of heart failure, patients are sent directly to the surgery suite for coronary bypass or valve replacement surgery. The

most severe acute heart failure patients are patients in profound cardiogenic shock, including those suffering from myocarditis, a viral attack
of the heart, or those suffering from impaired ability of the heart to pump blood, after a heart attack or heart surgery. According to results of
the SHOCK (Should We Emergently Revascularize Occluded Coronaries for Cardiogenic Shock) trial published in the August 26, 1999
edition of The New England Journal of Medicine, approximately 7 to 10% of the patients who are hospitalized for a heart attack suffer from
cardiogenic shock and 60 to 80% of those patients die. These patients typically require treatments in the surgery suite involving the use of
mechanical circulatory support devices that provide increased blood flow and reduce the stress on the heart. However, many less severe
patients in the cath lab could also benefit from circulatory support devices or other clinical treatment, which could potentially prevent them
from entering into profound shock.

The Market for Mechanical Circulatory Support Devices in the U.S.

There are two primary types of devices used in the cath lab and surgery suite in the U.S. for circulatory support for pre-shock and

profound shock patients: intra-aortic balloons, or IABs, and ventricular assist devices, or VADs.

An IAB is an inflatable balloon inserted via a catheter into the patient’s circulation and is inflated and deflated in synchrony with the
heart. This is used as an initial line of therapy in the cath lab or the surgery suite for patients with diminished heart function. However, IABs

typically provide only limited enhancement and depend on the patient’s own heart to generate the majority of the patient’s blood flow. In
addition, IABs are often required to be used in conjunction with inotropes or other drugs to stimulate heart muscle ejection. However, the use
of these drugs increases the risk of mortality. Clinical publications have demonstrated that the need for two or more inotropes to improve
blood flow results in mortality rates of approximately 80%. In addition, IABs have limited effectiveness in patients that are arrhythmic and /or
in cardiogenic shock and published reports have indicated that IABs do not reduce mortality for patients in cardiogenic shock. However, there
are an estimated 160,000 annual IAB procedures globally, with an estimated 110,000 IAB procedures annually in the U.S.

VADs are mechanical devices that help the failing heart pump blood or take over the pumping function of the failing heart. Historically,

VADs have been highly invasive and require implantation in the surgery suite. The use of VADs generally falls into three sub-categories:
recovery, bridge-to-transplant and destination therapy.

Recovery VADs are designed to enable the patient’s heart to rest and potentially recover so that the patient can return home with his or

her own heart. Because recovery is the goal, these devices are designed to minimize damage to heart tissue and be removed once the heart has
recovered. If possible, recovery of one’s own heart is generally preferred to transplantation or prolonged device implantation, both of which
have significant side effects for the patient and increase the risk of mortality. We believe heart recovery is a preferred clinical outcome for the
patient, since it also generally lowers the overall relative cost to the healthcare system versus alternative therapies and treatment paths that
may require multiple surgeries, lengthy hospital stays, chronic therapeutic and immunosuppressant drugs and other related healthcare costs.

Bridge-to-transplant VADs are primarily used to support chronic heart failure patients eligible to receive a heart transplant. According to
the United Network for Organ Sharing, there were only approximately 1,850 heart transplants in the U.S in 2006. As a result, about one third
of the patients eligible for transplant must rely on bridge-to-transplant devices for an extended period while waiting for a heart transplant.
During this time, these patients frequently experience significant medical complications, such as infection. Moreover, the implant of these
devices generally requires the removal of a portion of the patient’s heart tissue, significantly limiting the chance of recovery of the patient’s
heart.

Destination therapy generally involves the implantation of a mechanical support device as the last clinical alternative for a chronic patient

with end-stage heart failure who is not eligible for transplantation. Destination VAD therapy only prolongs the end-stage disease, as the
patient’s heart condition is terminal and the patient’s heart is not expected to recover. Furthermore, artificial replacement hearts, another
destination therapy modality, may be suitable for end-stage heart failure patients requiring full support.

Our Solution

Our product portfolio is designed to provide a continuum of care in heart recovery to acute heart failure patients from the intensive care
unit to the cath lab to the surgery suite to home discharge and to provide an array of choices for clinicians treating acute heart failure patients.
Our products provide various levels of blood flow and are capable of supporting a patient from hours to months and longer to align with the
clinical needs of the patient, whether in pre-shock or profound shock. Our cath lab products include an IAB and our catheter-based Impella ®
pumps for support of acute pre-shock patients or for prophylactic support of patients undergoing high-risk percutaneous coronary intervention.
Our surgery suite products include our Impella pumps (the Impella 2.5, Impella 5.0, and Impella LD), our IAB, our BVS ® 5000 blood pump
and AB5000 TM VAD. Our BVS 5000 and AB5000 are designed to support acute heart failure patients in need of more blood flow and longer
duration of support for AMI, cardiogenic shock post-AMI, and myocarditis.

Our Impella products are CE-marked in Europe. In June 2008, we received FDA 510(k) clearance for our Impella 2.5 device for partial

circulatory support for up to six hours. In April 2009, we received FDA 510(k) clearance of our Impella 5.0 and Impella LD Circulatory
Support Devices. These clearances allows us to sell the Impella pumps for commercial purposes. Our Impella 2.5 device is also the subject of
two U.S. pivotal studies comparing the Impella 2.5 to the IABP. Our Impella 5.0 device is also currently in a U.S. study. Impella expands our
product portfolio to include devices that address the majority of heart attack and high-risk angioplasty patients treated by interventional
cardiologists in the cath lab. This population consists of patients whose hearts can potentially recover with assistance but without open heart
surgery.

Our Impella 2.5 and 5.0 catheters are micro heart pumps that can be utilized in the cath lab by cardiologists and quickly inserted
percutaneously via the femoral artery using a guide wire to reach the left ventricle of the heart. The procedure time facilitates early patient
stabilization, giving an interventional cardiologist additional time to evaluate the most effective and clinically prudent treatment option for the
patient. These devices allow the heart to rest, heal and potentially recover without the use of inotropes, which are drugs commonly used with
IABs that increase the risk of mortality. In addition, the higher blood flow rate of our Impella 5.0 enables clinical use by surgeons as well to
treat more severe heart conditions in the surgery suite. We believe our Impella products can provide solutions to patients with less severe heart
disease, improving patient outcomes and increasing the number of patients who return home with their own hearts.

We developed our first heart recovery products for use in open heart centers and transplant centers. Our AB5000 and BVS 5000 are

capable of assuming the pumping function of the heart. Unlike destination therapy and bridge-to-transplant devices, which are designed for

heart patients with irreversible heart damage, our AB5000 and BVS 5000 systems are designed for heart recovery, requiring only a minimal
incision in the left ventricle of the heart. We believe the AB5000’s high flow rates, ease of implant, and historically low incidence of adverse
events facilitate heart recovery, avoiding unnecessary heart transplantation for patients with potential for heart recovery and thereby
improving patient outcomes. The Centers for Medicare & Medicaid Services, or CMS, increased reimbursement in October 2007 for our
AB5000 and BVS 5000 products for patients that recover using our devices to levels similar to those for patients who undergo heart
transplants. These reimbursement levels for AB5000 and BVS 5000 are now the highest paying diagnosis-related group, or DRG code of all
CMS codes. Since its introduction in 1992, the BVS 5000 has supported thousands of patients in hundreds of medical centers around the
world. The AB5000, our next-generation heart recovery device introduced in 2004, provides up to six liters of pulsatile flow, and provides
patient mobility. In January 2008, we received FDA labeling approval for one year bench reliability for our AB5000 VAD which is expected
to complement the durability of our new Portable Circulatory Support Driver that is discussed below.

We recently announced that we have developed a new Portable Circulatory Support Driver, or Portable Driver, for both in-hospital and

out-of-hospital patients. The Portable Driver is designed to support our AB5000 VAD. We received CE mark approval for our Portable Driver
in March 2008 and in fiscal year 2009 began to sell the product commercially in Europe and other countries outside the U.S. that accept the
CE mark designation. In January 2008, we submitted for an Investigational Device Exemption, or IDE, to conduct a patient discharge study in
the U.S. In May 2008, we received conditional approval for the Portable Driver for this IDE to conduct a U.S. patient discharge study at 20
hospitals for 30 patients. In March, 2009, we received FDA approval of our Premarket Approval Application, or PMA, supplement for the AB
Portable™ Driver. This clearance allows for immediate commercial shipment of the device to U.S. hospitals for use as a primary driver in
hospitals and for transporting patients. Discharging inpatients is still limited to the trial in the U.S.

We believe our AB5000 and BVS 5000 products are the only commercially available cardiac assist devices approved by the FDA for

heart recovery for 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. In addition, our Impella products together with our FDA-cleared IAB
and FDA-approved iPulse combination console, will expand our heart recovery devices beyond the surgery suite by providing circulatory
support for pre-shock heart failure patients in the cath lab. This expansion into the cath lab will significantly increase our target market
opportunity and is expected to enable us to offer an array of products to interventional cardiologists in the approximately 1,900 U.S. hospitals
with cath labs. We estimate that there are approximately 14,000 interventional cardiologists in the U.S. The potential target patient population
in the cath lab for our Impella and IAB devices includes approximately one million percutaneous coronary intervention, or PCI, U.S. patients
annually who enter the hospital for heart attacks and high-risk angioplasty procedures. This target patient base is in addition to our existing
target U.S. patient population of approximately 75,000 patients annually suffering from cardiogenic shock after a heart attack or heart surgery,
or suffering from myocarditis. Our existing target patients are those treated in the approximately 1,000 open heart centers and transplant
centers in the U.S., which continue to represent a significant opportunity for growth as well. We are also focusing on markets outside the U.S.
to enhance the standard of circulatory care worldwide and increase our revenue growth potential.

We received 510(k) clearance from the FDA for our IAB in December 2006 and CE Mark approval in January 2007. Our IAB is inserted

percutaneously into a patient’s descending aorta and inflates and deflates in counter pulsation to the patient’s heart pumping cycle. The IAB
extends our clinical and market reach further upstream in the care of acute heart disease patients, including direct usage in the intensive care
unit, cath lab and surgery suite.

To support the IAB, we developed our iPulseTM combination console. The iPulse console is also designed to support our AB5000 and
BVS 5000 systems, other manufacturers’ IABs and products we may offer in the future. We believe the ability of the iPulse console to support
multiple devices will make it more attractive than consoles designed to operate a single device. The iPulse console supports procedures with
associated Medicare reimbursement that extends across four DRGs. The iPulse console has CE mark approval in Europe and was approved by
the FDA in late December 2007 for commercial sale in the U.S. The iPulse console is designed to support our IAB as well as other
manufacturers’ IABs, which are used in the cath lab and surgery suite. Because our multi-functional console also supports our AB5000 and
BVS 5000 blood pumps, we believe the iPulse will provide our customers additional flexibility in allocating console resources between the
surgery suite and the cath lab. In addition, we believe adoption of our iPulse console and our Portable Circulatory Support Driver, as well as
the introduction of the Impella 5.0 and Impella LD, will increase utilization of our AB5000 ventricle over time as we focus more attention on
the surgery business.

In January 2008, we received Humanitarian Device Exemption, or HDE, supplement approval from the FDA for our engineering and
product enhancements to our AbioCor® Implantable Replacement Heart or AbioCor, the first completely self-contained artificial heart. The
AbioCor can be made available to a limited patient population, with no more than 4,000 patients receiving the technology under the limits of
the HDE approval in the U.S. each year. Because the AbioCor is only available to a limited patient population, we do not expect that the
demand will meet the 4,000 patient limit under HDE approval. We have no current plans to seek a broader regulatory approval of the
AbioCor. The AbioCor gives chronic patients with biventricular heart failure who are not eligible for a transplant and whose sole alternative is
death, the opportunity to extend life. The AbioCor has no wires piercing the skin and allows the patient improved quality of life outside the
hospital. The use of AbioCor is limited to normal to larger sized male patients and has a product life expectancy of 18-24 months. We are
testing a newer version of the AbioCor, the AbioCor II, that will be smaller and may have a longer product life expectancy than the AbioCor.
We began selling the AbioCor in the fourth quarter of fiscal 2008 in a controlled roll-out to a limited number of heart centers in the U.S. We
did not record any revenue from sales of the AbioCor in fiscal 2009. We do not expect that sales of the AbioCor will be a material portion of
our total revenues for the foreseeable future.

Our Strategy

Our strategic objective is to establish heart recovery as the goal for all acute cardiac attacks. To achieve this objective, we intend to:

•

Expand our global distribution and clinical expertise in the cath lab. With the growth in our product portfolio and recent regulatory
clearances for certain products, we now have greater opportunities to market and sell our products to both heart surgeons and
interventional cardiologists in the U.S. and abroad. To address this larger market, we plan to continue to expand our global sales and
clinical headcount with extensive clinical experience, particularly in the cath lab, to enhance our ability to market and sell our
products to interventional cardiologists.

Establish recovery awareness through clinical data and published scientific studies. Many heart surgeons and cardiologists are
unfamiliar with the clinical results that have been achieved with our heart recovery devices. We are using evidence-based medicine
to promote heart recovery as the goal for patients with failing but potentially recoverable hearts. Through our U.S. pivotal trials, we
are working to demonstrate that our Impella products are superior to the use of IABs and inotropes as the initial treatment for less
severe heart failure patients. As discussed above, our Impella 2.5 device received 510(k) clearance from the FDA in June 2008 for
partial circulatory support for up to six hours. We intend to continue to support the publication of papers that illustrate the benefits
of heart recovery, provide webcasts and seminars on the cost savings associated with recovery, promote heart recovery at industry
trade shows and hold training sessions for clinicians to begin using our heart recovery products. We will also continue to educate
hospitals about CMS and commercial insurance reimbursement options available for our products.

Continue to enhance our product portfolio to address patients along the entire continuum of care for heart recovery, from the cath
lab, to the surgery suite, to the intensive care unit, to home discharge. Our earliest circulatory assist product, the BVS 5000 system,
and our next-generation AB5000 system address heart failure patients requiring surgical intervention to improve their heart function
and are sold primarily to open heart centers and transplant centers. We now have Impella 2.5 and 5.0 catheters and recently
launched our IAB and iPulse platform. These products target the larger population of acute heart failure patients in the cath lab,
whose hearts might recover with assistance but without open heart surgery. Our Impella 2.5 and 5.0 products, iPulse platform and
Portable Driver are CE marked. Our IAB and iPulse are FDA-cleared and approved, respectively. Our Impella 2.5, Impella 5.0, and
Impella LD circulatory devices have received 510(k) clearance, and we have received FDA approval of our PMA supplement for
our Portable Driver in the U.S. We intend to continue to develop and introduce additional new products to cover a broader
population of potential heart recovery patients and we also plan to seek regulatory approval for the use of our products for a broader
range of patient indications. We also have a number of new circulatory support products at various stages of development.

Evaluate strategic opportunities to add complementary products and technologies. We constantly evaluate strategic opportunities to
add complementary products and technologies and we may pursue selective additions that would provide products or intellectual
property that enhance our product portfolio to address patients across the continuum of care in heart recovery.

Our Products

We are building a portfolio of cardiac assist solutions for cardiologists and surgeons. Our cardiac assist products provide circulatory

support to acute heart failure patients across the continuum of care in heart recovery. (✓ = approved or cleared)

Product Name

Description of Use

Regulatory Status

Disposable Products for the Surgery Suite

BVS 5000 Blood Pump

AB5000 Ventricle

Provides temporary LVAD, RVAD or BiVAD support until recovery for
cardiogenic shock from heart attack; post-cardiotomy cardiogenic shock;
myocarditis, failed transplant and certain other clinical instances where the
physician believes heart recovery is possible.

Provides temporary LVAD, RVAD or BiVAD support until recovery for
cardiogenic shock from heart attack: post-cardiotomy cardiogenic shock;
myocarditis, failed transplant and certain other clinical instances where the
physician believes heart recovery is possible; allows for full patient mobility.

Integrated Cannula
System

Connects the BVS 5000 and AB5000 ventricle to the body and provides an option
for the removal of the devices without re-opening the chest.

Impella LD

Provides temporary LVAD support for recovery from post-cardiotomy
hemodynamic instability where the physician believes heart recovery is possible.
Provides temporary LVAD support for recovery from cardiogenic shock.

Disposable Products for the Cardiac Catheterization Lab and the Surgery Suite

Impella 2.5

Impella 5.0

IAB

Consoles

Miniature percutaneous heart pump providing up to 2.5 liters of blood flow per
minute intended to support the heart while undergoing high-risk angioplasty
procedures or for assisting the heart while in pre-shock for hemodynamic
stabilization.
Under 510(k) clearance, approved for partial circulatory support for up to six
hours.

Percutaneous heart pump providing up to 5.0 liters of blood flow per minute for
low cardiac output post-surgery patients intended to assist the heart while in pre-
shock or profound shock for recovery.

Percutaneous intra-aortic balloon used to support a wide variety of prophylactic,
pre-shock and profound shock conditions.

AB5000 Console

Driver console for both BVS 5000 Blood Pump and AB5000 Ventricle.

Mobile Pump Console

Driver console for Impella products.

iPulse Console

Multi-purpose driver console for IAB, AB5000, BVS 5000 and other
manufacturers’ IABs.

Portable Discharge
Driver

Driver console for AB5000 for in-hospital and out-of-hospital patients; enables
patient discharge while on support.

✓

CE Mark

✓

Not yet
submitted

✓

✓
510(k) clearance;
IDE approved.
Safety in
progress

✓
510(k) clearance;
IDE approved
and pivotal
studies in
progress for
high-risk PCI
and AMI shock

✓
510(k) clearance;
IDE approved.
Safety in
progress

✓

✓
510(k) clearance;
IDE approved
2.5, 5.0, and LD

✓

FDA approval
for in-hospital
use; IDE
approval for
patient discharge

Disposable Implants

AbioCor

Fully implantable replacement heart for severe biventricular heart failure when
chronic patients are ineligible for a heart transplant.

HDE Approved

Not yet
submitted

Impella 2.5, Impella 5.0, and Impella LD

Our Impella 2.5 and 5.0 catheters are percutaneous micro heart pumps with integrated motors and sensors for use in interventional
cardiology and heart surgery. These devices are designed for use by interventional cardiologists to support pre-shock patients in the cath lab
who may not require as much support as patients in the surgery suite or for use in surgery for patients who may require assistance to maintain
their circulation. Our Impella catheters are also designed to provide ventricular support for patients requiring hemodynamic stabilization or
suffering from reduced cardiac output, and can aid in recovering the hearts of patients following a heart attack. These products are intended to
increase flow to the heart and organs without the need for drugs such as inotropes while reducing the workload of the heart.

These catheters can be quickly inserted via the femoral artery using a guide wire to reach the left ventricle of the heart where they are

directly deployed to draw blood out of the ventricle and deliver it to the circulation. This function is intended to reduce ventricular work
(resting the heart) and provide flow to the rest of the organs. The Impella 2.5 is introduced with normal interventional cardiology procedures,
while the Impella 5.0 is implanted via a small incision in the femoral artery in the groin. The Impella 2.5 can pump up to 2.5 liters of blood
per minute and the Impella 5.0 can pump up to five liters of blood per minute. The Impella 5.0 has been used to treat patients in need of
cardiac support resulting from post-cardiotomy cardiogenic shock, myocarditis, low cardiac output after a heart attack, or post-coronary
intervention procedures.

Our Impella 2.5 device received 510(k) clearance from the FDA in June 2008 and our Impella 5.0 and Impella LD devices received
510(k) clearance in April 2009, in each case for partial circulatory support for up to six hours. Our Impella devices have CE mark approval in
Europe, are approved in over 40 countries, have already been used to treat more than 1,500 patients in Europe and other countries outside the
U.S. and have been the subject of over 40 peer-reviewed publications and other clinical presentations and publications.

In addition, we are pursuing FDA approval for our Impella heart pumps through a pre-market approval, or PMA path, for our Impella 2.5

and 5.0 products. In August 2007, we received approval from the FDA to begin a high-risk percutaneous coronary intervention, or PCI,
pivotal clinical trial, known as the Protect II study, for the Impella 2.5. This approval was based on the submission of the clinical results of the
safety pilot clinical trial. The pivotal study will determine the safety and effectiveness of the Impella 2.5 as compared to optimal medical
management with an IAB, during “high-risk” angioplasty procedures. The study inclusion criteria have been extended to include patients with
triple vessel disease with low ejection fraction. The study is approved under category B2 status and the trial sites are eligible for full
reimbursement from CMS. The randomized pivotal study, in which 654 patients at up to 150 hospitals will undergo a high-risk PCI
procedure, is comprised of two arms comparing nearly equal number of Impella 2.5 supported patients and IAB supported patients during the
procedure. Patients receiving the Impella 2.5 can be supported for up to five days as a left VAD. We have commenced shipments of Impella
2.5 disposables and Impella consoles to the enrolled pivotal sites. As of March 31, 2009, a total of 95 hospitals are participating in the Protect
II study and a total of 223 patients have completed the Protect II study, or 34% of the 654 patients required. Based on current trial enrollment
rates, we expect to complete the Protect II study in early 2012.

The market for PCI, which includes high-risk patients, provides a significant addressable market opportunity for the Impella 2.5 and

represents the highest individual utilization for IABs. More than 20,000 IABs are used per year in the U.S. alone for PCI. There are an
estimated one million PCI procedures in the U.S. and an estimated 60,000 patients are high-risk and may benefit from our Impella 2.5 if
approved or cleared by the FDA.

In March 2008, we received approval from the FDA to begin a second pivotal study for our Impella 2.5 in the U.S. under an IDE for

hemodynamically unstable patients undergoing a PCI procedure due to acute myocardial infarction, or AMI, commonly referred to as heart
attack. The AMI study, known as Recover II, will determine the safety and effectiveness of the Impella 2.5 as a left ventricular assist device
for heart attack patients as compared to optimal medical management with an IAB. The study is approved under category B2 status and the
trial sites are eligible for full CMS reimbursement. The randomized study, at up to 150 hospitals, is comprised of two arms; those patients that
receive the Impella 2.5 for up to five days and patients that receive IAB therapy. The study will compare 192 Impella 2.5 patients to 192 IAB
patients relative to a composite end point comparing safety and efficacy. The proposed primary endpoint will be a composite endpoint of
major events assessed at 30 days post-AMI. These major events include but are not limited to: death, acute renal failure, and need for a major
cardiovascular operation. The secondary endpoint will be a composite of cardiac function such as ejection fraction, requirement for inotropic
support and cardiac power output. We plan to ship Impella 2.5 disposables and Impella consoles to enrolled sites. There are estimated to be
approximately 100,000 AMI anterior infarct patients annually in the U.S. and these patients suffer failure of the left ventricle, the large main
pumping muscle of the heart. Feasibility studies suggest that of heart attack patients, these are the patients that can be most helped by the
Impella 2.5 technology.

The clinical experience to date with our Impella 2.5 has been favorable, including our recently completed U.S. safety pilot clinical trial.

Factors that affect the length of time to complete the pivotal studies in the U.S. study include the timing of each center receiving IRB
approval, the timing of the training we will provide each center, and the rate of patient enrollment. At this time we cannot estimate the
duration of the Recover II Impella 2.5 pivotal study discussed above.

The Impella 5.0 is in a pilot clinical study that will enroll up to 20 patients at 15 U.S. sites. The study will include postcardiotomy
patients who have been weaned from heart-lung machines and whose hearts require added support to maintain good blood flow. The study
will enroll those patients that would typically need more flow and hemodynamic support than provided by an IAB.

AB5000 and BVS 5000

We manufacture and sell the AB5000 Circulatory Support System and the BVS 5000 Biventricular 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. The AB5000 and BVS 5000 systems, which are implanted in the surgery suite, can assume the
full pumping function of a patient’s failing heart, allowing the heart to rest, heal and potentially recover. Both systems are designed to provide
either univentricular or biventricular support. We believe the AB5000 and BVS 5000 systems are the only commercially available cardiac
assist devices that are approved by the FDA for heart recovery for 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.

The BVS 5000 Biventricular Support System was our first product and has been available for sale since 1992. It was the first

FDA-approved heart assist device capable of assuming the pumping function of the heart. Since its introduction, the BVS 5000 has supported
thousands of patients in the U.S., Europe and other countries.

The AB5000 Circulatory Support System, our next-generation product for heart recovery, is designed to provide a longer duration of
support than the BVS 5000 and facilitates patient mobility in the hospital. The AB5000 can provide up to 6.0 liters of pulsatile blood flow per
minute to support patients in profound shock and was approved by the FDA in 2003. Our AB5000 is designed to provide enhanced patient
mobility within and between medical centers and to provide enhanced features and ease of use for caregivers. We believe the AB5000
system’s high flow rates, ease of implant and historically low incidence of adverse events facilitate heart recovery, for patients with potential
for recovery, potentially avoiding the need for heart transplantation and thereby improving patient outcomes. In January 2008, we received
FDA labeling approval of one year bench reliability for our AB5000 ventricle.

Each of the AB5000 and BVS 5000 systems consists of a ventricle or blood pump, one atrial or ventricular cannula, one arterial cannula

and a driver console to operate the pump. Other than the console, each component is a disposable item. The AB5000 console supports
biventricular BVS 5000 blood pumps, AB5000 ventricles or a combination of the two. Both the AB5000 and BVS 5000 systems use the same
cannulae and console, allowing for seamless transition of devices without requiring an additional surgical procedure. We expect customer
demand to shift from the AB5000 console to our iPulse combination console. Our iPulse combination console can run our AB5000 ventricle
and BVS 5000 blood pump and our IAB and other manufacturers’ IABs.

Portable Driver

We have developed a Portable Circulatory Support Driver for both in-hospital and out-of-hospital patients. The Portable Driver is
designed to support our AB5000 VAD. The combination of our Portable Driver and AB5000 VAD is designed to provide support of acute
heart failure patients. In many cases, profound shock heart patients require biventricular support (both sides of the heart).

AB5000 is designed to provide either uni-ventricular or bi-ventricular support. Our FDA labeling approval of one year bench reliability

for our AB5000 VAD, is expected to complement the Portable Driver reliability. We received CE mark approval for our Portable Driver in
March 2008 and in January 2008 we submitted for an IDE to conduct a patient discharge study in the U.S. In May 2008, we received
conditional approval for the Portable Driver for this IDE to conduct a U.S. patient discharge study at 20 hospitals for 30 patients. In March,
2009, we received FDA approval of our PMA supplement for the AB Portable™ Driver. This clearance allows for immediate commercial
shipment of the device to U.S. hospitals for in hospital and transport use. The out of hospital use is being studied in a clinical trial to allow
patients to go home while waiting for recovery.

IAB and iPulse

Our IAB is easy to insert and is designed to enhance blood flow to the heart and other organs for patients with diminished heart function.

To support the IAB, we developed our iPulse combination console. The iPulse console is also designed to support our AB5000 ventricle and
BVS 5000 blood pump, other manufacturers’ IABs and products we may offer in the future. We believe the ability of the iPulse console to
support multiple devices will make it more attractive than consoles designed to operate a single device. The iPulse console will support
procedures with associated Medicare reimbursement that extends across four diagnostic related groups, which further enhances its
attractiveness to customers.

The iPulse console is designed to support our IAB as well as other manufacturers’ IABs, which are used in the cath lab and surgery suite.

Because our multi-functional console also supports our AB5000 ventricle and BVS 5000 blood pump, we believe the iPulse will provide our
customers additional flexibility in allocating console resources between the surgery suite and the cath lab. In addition, because a significant
portion of IABs are used in the surgery suite, we believe adoption of our iPulse console and Portable Driver will increase utilization of our
AB5000 ventricle.

We received 510(k) clearance from the FDA for our IAB in December 2006 and CE Mark approval in January 2007. The iPulse console

has received CE mark approval in Europe and was approved by the FDA in late December 2007 for commercial sale in the U.S. We expect
customer demand to shift over time from our AB5000 console to our iPulse combination console.

Cannulae

Each of our AB5000 and BVS 5000 systems requires two cannulae, or tubes, that connect the ventricle or blood pump to the heart and an

associated artery. We offer a variety of cannulae. We introduced our integrated cannula system, which was approved by the FDA in July
2006. This integrated cannula system, which is easier to implant and can be removed through a small incision, has the potential for use
off-pump (also called beating heart) with minimally invasive procedures. For example, although removal of the cannulae requires a surgical
procedure, it does not require a sternotomy, a substantially more invasive procedure that separates the breastbone in order to access the heart.
Moreover, because the AB5000 and the BVS 5000 blood pumps use the same cannulae, clinicians can seamlessly transfer patients from one
device to another without requiring an additional surgical procedure.

AbioCor

Our AbioCor Implantable Replacement Heart is the first completely self-contained artificial heart. Designed to sustain the body’s
circulation, the AbioCor is intended for end-stage biventricular heart failure patients whose other treatment options have been exhausted.
Patients with advanced age, impaired organ function or cancer are generally ineligible for a heart transplant and are potential candidates to
receive the AbioCor implantable heart. The complete AbioCor system consists internally of a thoracic unit, a rechargeable battery, an
electronics package and a power receiver coil, and externally, a power transmitter coil, power and battery pack, handheld alarm monitor,
patient home electronics and an in hospital console. Once implanted, the AbioCor system does not penetrate the skin, reducing the chance of
infection. This technology provides patients with mobility and remote diagnostics. The use of AbioCor is limited to normal to larger sized
male patients and has a product life expectancy of 18-24 months. We are testing a newer version of the AbioCor, the AbioCor II, that will be
smaller and may have a longer product life expectancy than the AbioCor.

We received HDE supplement approval from the FDA for product enhancement of the AbioCor in January 2008. HDE approval signifies
that no comparable alternative therapy exists for patients facing imminent death without the technology. HDE approval allows the AbioCor to
be made available to a limited patient population, with no more than 4,000 patients receiving the technology in the U.S. each year under HDE
approval limits. Because the AbioCor is only available to a limited patient population, we do not expect that demand will meet the 4,000
patient limit under HDE approval. We have no current plans to seek a broader regulatory approval of the AbioCor. We began selling the
AbioCor in the fourth quarter of fiscal 2008 in a controlled roll-out to a limited number of heart centers in the U.S. We have selected the
following sites to date as AbioCor centers: The Johns Hopkins Hospital in Baltimore, MD; Robert Wood Johnson University Hospital in New
Brunswick, NJ; and St. Vincent’s Hospital in Indianapolis, IN. We are unable to determine how many patient procedures will be performed
after the centers are trained; however, we do not expect it to be a material number. In May 2008, we received a positive National Coverage
Determination, or NCD, from CMS to reimburse hospitals for the cost of the AbioCor replacement heart and the cost of implanting the device
as part of Coverage with Evidence Development, or CED. Three insurance companies have existing coverage policies for the AbioCor: Cigna,
Humana and Healthnet. We did not record any revenue from sales of the AbioCor in fiscal 2009. We do not expect that revenues from sales of
the AbioCor will be a material portion of our total revenues for the foreseeable future as our primary strategic focus is centered around heart
recovery for acute heart failure patients.

Research and Product Development

Over the last 28 years, we have gained substantial expertise in circulatory support while developing the BVS and the AB5000 systems

and our AbioCor. Our current strategy is to develop a complete portfolio of products to treat acute heart failure patients with the goal of heart
recovery. We have used this expertise to develop our IAB, iPulse and Portable Driver, and we intend to continue to use this experience to
develop additional circulatory support products. Our research and development efforts are focused on developing a broader portfolio of
products across the continuum of care in heart recovery, primarily focused in the area of circulatory care. In addition, we have a number of
new products at various stages of development some of which integrate with the Impella technology platform.

As of March 31, 2009, research and development staff consisted of 103 professional and technical personnel, including 34 engineers with
advanced degrees, covering disciplines such as electrical engineering, mechanical engineering, computer science, reliability engineering, fluid
mechanics, materials and physiology.

We expended $25.3 million, $24.9 million, and $22.3 million on research and development in fiscal years 2009, 2008, and 2007,
respectively. Our research and development expenditures include costs related to clinical trials, including ongoing pilot and pivotal clinical
trials for our Impella products.

Sales, Clinical Support, Marketing and Field Service

As of March 31, 2009, our worldwide sales, clinical support, marketing and field service teams included 119 full-time employees, 97 of
whom are in the U.S. and 22 of whom are in Europe. Over the past five years, we have significantly increased the number of our direct sales
and clinical support personnel covering the U.S., Germany, and France.

Our clinical support personnel consist primarily of registered nurses with experience in either the surgery suite or the cath lab, and they

play a critical role in training current and prospective customers in the use of our products.

International sales (sales outside the U.S., primarily in Europe) accounted for 14%, 17%, and 11% of total product revenue during the

fiscal years ended March 31, 2009, 2008, and 2007, respectively.

Manufacturing

We currently manufacture our products in Danvers, Massachusetts and Aachen, Germany. Our U.S. operations manufacture the BVS

5000, AB5000, AbioCor, IAB, iPulse and Portable Driver. Our Aachen, Germany facility manufactures all of our Impella products. In
addition, we rely on third-party suppliers to provide us with some components used in our existing products and products under development.
For example, we outsource some of the manufacturing of our consoles.

We believe our existing manufacturing facilities give us the necessary capacity to produce sufficient quantities of products to meet
anticipated demand for at least the next twelve months based on our revenue forecast. In fiscal 2008 and 2009, we invested in capacity
expansion in our German facility to meet the growing demand of our Impella 2.5 product after the 510(k) clearance that we received in June
2008. In July 2008, we entered into an agreement to lease additional manufacturing space in Athlone, Ireland in anticipation of supporting
future demand of Impella 2.5. We are presently constructing the production line for this facility and are hopeful of manufacturing our first
Impella 2.5 devices for human use from this facility in late fiscal 2010. Our U.S. and German manufacturing facilities are ISO certified and
operate under the FDA’s good manufacturing practice requirements set forth in the current quality system regulation, or QSR.

Intellectual Property

We have developed significant know-how and proprietary technology, upon which our business depends. To protect our know-how and
proprietary technology, we rely on trade secret laws, patents, copyrights, trademarks, and confidentiality agreements and contracts. However,
these methods afford only limited protection. Others may independently develop substantially equivalent proprietary information or
technology, gain access to our trade secrets or disclose or use such secrets or technology without our approval.

A substantial portion of our intellectual property rights relating to the AB5000, the BVS 5000 and the AbioCor is in the form of trade

secrets, rather than patents. We protect our trade secrets and proprietary knowledge in part through confidentiality agreements with
employees, consultants and other parties. We cannot assure you that our trade secrets will not become known to or be independently
developed by our competitors.

We own or have rights to numerous U.S. and foreign patents. Our U.S. patents have expiration dates ranging from 2009 to 2026 and our

foreign patents have expiration dates ranging from 2011 to 2025. We also own or have rights to certain pending U.S. and foreign patent
applications. We believe patents will be issued pursuant to such applications, but cannot guarantee it. Moreover, neither the timing of any
issuance, the scope of protection, nor the actual issue date of these pending applications can be forecasted with precision. Where we have
licensed patent rights from third parties, we are generally required to pay royalties.

Our patents may not provide us with competitive advantages. Our pending or future patent applications may not be issued. The patents of

others may render our patents obsolete, limit our ability to patent future innovations, or otherwise have an adverse effect on our ability to
conduct business. Because foreign patents may afford less protection than U.S. patents, they may not adequately protect our technology.

The medical device industry is characterized by a large number of patents and by frequent and substantial intellectual property litigation.
Our products and technologies could infringe on the proprietary rights of third parties. If third parties successfully assert infringement or other
claims against us, we may not be able to sell our products or we may have to pay significant damages and ongoing royalties. In addition,
patent or intellectual property disputes or litigation may be costly, result in product development delays, or divert the efforts and attention of
our management and technical personnel. If any such disputes or litigation arise, we may seek to enter into a royalty or licensing arrangement.
However, such an arrangement may not be available on commercially acceptable terms, if at all. We may decide, in the alternative, to litigate
the claims or seek to design around the patented or otherwise protected proprietary technology.

The U.S. government may obtain certain rights to use or disclose technical data developed under government contracts that supported the

development of some of our products. We retain the right to obtain patents on any inventions developed under those contracts, provided we
follow prescribed procedures and are subject to a non-exclusive, non-transferable, royalty-free license to the U.S. government.

Competition

Competition among providers of treatments for the failing heart is intense and subject to rapid technological change and evolving
industry requirements and standards. We compete with companies that have substantially greater or broader financial, product development

and sales and marketing resources and experience than we do. These competitors may develop superior products or products of similar quality
at the same or lower prices. Moreover, improvements in current or new technologies may make them technically equivalent or superior to our
products in addition to providing cost or other advantages. Other advances in medical technology, biotechnology and pharmaceuticals may
reduce the size of the potential markets for our products or render those products obsolete.

Our customers frequently have limited budgets. As a result, our products compete against a broad range of medical devices and other

therapies for these limited funds. Our success will depend in large part upon our ability to enhance our existing products, to develop new
products to meet regulatory and customer requirements, and to achieve market acceptance. We believe that important competitive factors with
respect to the development and commercialization of our products include the relative speed with which we can develop products, establish
clinical utility, complete clinical trials and regulatory approval processes, obtain reimbursement, and supply commercial quantities of the
product to the market.

The AB5000 and BVS 5000 systems can assume the full pumping function of the heart. The FDA approved these systems as recovery
devices for the treatment of patients with potentially reversible heart failure. These products compete with a temporary cardiac assist device
from Thoratec Corporation, which is also capable of assuming the full pumping function of the heart and is today approved as a recovery
device for post-cardiotomy support only. The Thoratec device was originally approved for bridge-to-transplant indications and we believe
bridge-to-transplant continues to be the primary use of the device. In addition, the AB5000 and BVS 5000, as well as our Impella products,
compete with other blood pumps that are used in medical centers for a variety of applications, such as intra-aortic balloon pumps, including
those offered by Maquet (formerly known as Datascope) and Arrow International, and centrifugal pumps. Levitronix is conducting clinical
trials in the U.S. for a device that may compete with our heart assist products in some applications. Levitronix has licensed this product to
Thoratec for distribution in the U.S. These pumps are cleared under a 510(k) submission in which their labeling does not allow for specific
indications beyond six hours of use. These pumps are limited to either providing partial pumping support of failing hearts, or are
non-pulsatile, or are not recommended for the duration of support generally required for recovery. The FDA provided 510(k) clearance for a
product designed by CardiacAssist, Inc. that may compete with our products. Approval by the FDA of products that compete directly with our
products could increase competitive pricing and other pressures. We believe that we will compete with such products based primarily on
clinical effectiveness, scientific evidence, global customer relationships and customer relations.

We are aware of other heart replacement device research efforts in the U.S., Canada, Europe and Japan, but we are not aware of any
plans for any other totally implantable replacement heart to commence clinical trials in the U.S. or anywhere in the world. The FDA has
approved Syncardia Systems’ CardioWest Total Artificial Heart for use as a bridge to transplantation in cardiac transplant-eligible candidates
at risk of imminent death from non-reversible biventricular failure. Unlike our AbioCor, the CardioWest heart is not fully implantable. In
addition, there are a number of companies—including Thoratec, Jarvik Heart, World Heart Corporation, MicroMed Technology, Ventracor,
EvaHeart, Terumo Heart and several early-stage companies—that are developing permanent heart assist products, including implantable left
ventricular assist devices, or LVADs, and miniaturized rotary ventricular assist devices, that may address markets that overlap with certain
segments of the markets targeted by our products. In addition to these devices, several companies and institutions have been for many years
investigating xenotransplantation, the transplantation of a heart from another species, as a potential therapy. Research is also being conducted
by others to develop gene and cell therapy potentially to reverse the disease process or to supplant diseased heart cells.

Third-Party Reimbursement

Our products and services are generally purchased by healthcare institutions that rely on third-party payers to cover and reimburse the

costs of related patient care. In the U.S., as well as in many foreign countries, government-funded or private insurance programs pay the cost
of a significant portion of a patient’s medical expenses. No uniform policy of coverage or reimbursement for medical technology exists
among all these payers. Therefore, coverage and reimbursement can differ significantly from payer to payer.

Third-party payers may include government healthcare programs such as Medicare or Medicaid, private insurers or managed care

organizations. CMS is responsible for administering the Medicare program and, along with its contractors, establishes coverage and
reimbursement policies for the Medicare program. Because a large percentage of the population for which our products are intended includes
elderly individuals who are Medicare beneficiaries, Medicare’s coverage and reimbursement policies are particularly significant to our
business. In addition, private payers often follow the coverage and reimbursement policies of Medicare. We cannot assure you that
government or private third-party payers will cover and reimburse the procedures using our products in whole or in part in the future or that
payment rates will be adequate.

Medicare payment may be made, in appropriate cases, for procedures performed in the in-patient hospital setting using our technology.

Medicare generally reimburses the facilities in which the procedures are performed based upon prospectively determined amounts. For
hospital in-patient stays, the prospective payment generally is determined by the patient’s condition and other patient data and procedures
performed during the in-patient stay, using a classification system known as diagnosis-related groups, or DRGs. Prospective rates are adjusted
for, among other things, regional differences, co-morbidity, and complications. Hospitals performing in-patient procedures using our devices
generally do not receive separate Medicare reimbursement for the specific costs of purchasing or implanting our products. Rather,
reimbursement for these costs is bundled with the DRG-based payments made to hospitals for the procedures during which our devices are

implanted, removed, repaired or replaced. Because prospective payments are based on predetermined rates and may be less than a hospital’s
actual costs in furnishing care, hospitals have incentives to lower their in-patient operating costs by utilizing products, devices and supplies
that will reduce the length of in-patient stays, decrease labor or otherwise lower their costs.

Coverage and reimbursements for procedures to implant, remove, replace or repair the AB5000 and BVS 5000 are well-established in the

U.S. market. For instance, Medicare covers the use of VADs, such as our AB5000 and BVS 5000 devices, when used for support of blood
circulation post-cardiotomy, as a temporary life-support system until a human heart becomes available for transplant, or as therapy for patients
who require permanent mechanical cardiac support. CMS recently increased Medicare reimbursement for patients that recover during an
in-patient stay using external VADs, such as our AB5000 and BVS 5000 devices, to levels similar to those for patients who undergo heart
transplants. Reimbursements for patients who do not recover remain at lower levels.

In addition to payments to hospitals for procedures using our technology, Medicare makes separate payments to physicians for their

professional services when they perform surgeries to implant, remove, replace or repair our AB5000 or BVS 5000 devices. Physicians
generally bill for such services using a coding system known as Current Procedural Terminology, or CPT, codes. Physician services
performed in connection with the implantation, removal, replacement or repair of our AB5000 or BVS 5000 devices are billed using a variety
of CPT codes. Generally, Medicare payment levels for physician services are based on the Medicare Physician Fee Schedule and are revised
annually by CMS.

In May 2008, we received positive National Coverage Determination, or NCD, from CMS to reimburse hospitals for the cost of the
AbioCor replacement heart and the cost of implanting the device as part of Coverage with Evidence Development, or CED. Three insurance
companies have existing coverage policies for the AbioCor: Cigna, Humana and Healthnet.

In general, third-party reimbursement programs in the U.S. and abroad, whether government-funded or commercially insured, are

developing a variety of increasingly sophisticated methods of controlling healthcare costs, including prospective reimbursement and capitation
programs, group purchasing, redesign of benefits, second opinions required prior to major surgery, careful review of bills, encouragement of
healthier lifestyles and exploration of more cost-effective methods of delivering healthcare. These types of cost-containment programs, as well
as legislative or regulatory changes to reimbursement policies, could limit the amount which healthcare providers may be willing to pay for
our medical devices

Government Regulation

The healthcare industry, and thus our business, is subject to extensive federal, state, local and foreign regulation. Some of the pertinent

laws have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of
interpretations. In addition, these laws and their interpretations are subject to change.

Premarket Regulation

The FDA strictly regulates medical devices under the authority of the Federal Food, Drug and Cosmetic Act, or FFDCA, and its

regulations. The FFDCA and the implementing regulations govern, among other things, the following activities relating to our medical
devices: preclinical and clinical testing, design, development, manufacture, safety, efficacy, labeling, storage, record keeping, sales and
distribution, post-market adverse event reporting, and advertising and promotion.

In the U.S., medical devices are classified into one of three classes (Class I, II or III) based on the statutory framework described in the

FFDCA. Class III devices, which are typically life-sustaining, life-supporting or implantable devices, or new devices that have been found not
to be substantially equivalent to legally marketed devices, must generally receive premarket approval, or PMA, by the FDA to ensure their
safety and effectiveness.

When clinical trials of a device are required in order to obtain FDA approval, the sponsor of the trial is required to file an IDE application

before commencing clinical trials. The IDE application must be supported by data, which typically include the results of extensive device
bench testing, animal testing performed in conformance with Good Laboratory Practices, and formal laboratory testing and documentation in
accordance with appropriate design controls and scientific justification.

The FDA reviews and must approve an IDE before a study may begin in the U.S. In addition, the study must be approved by an
Institutional Review Board, or IRB, for each clinical site. When all approvals are obtained, the study may be initiated to evaluate the device.

The FDA, and the IRB at each institution at which a clinical trial is being performed, may suspend a clinical trial at any time for various

reasons, including a belief that the subjects are being exposed to an unacceptable health risk. All clinical studies of investigational devices
must be conducted in compliance with FDA requirements. During a study, we are required to comply with the FDA’s IDE requirements for
investigator selection, trial monitoring, reporting, recordkeeping and prohibitions on the promotion of investigational devices or making safety

or efficacy claims for them. The investigators must obtain patient informed consent, rigorously follow the investigational plan and study
protocol, control the disposition of investigational devices, and comply with all reporting and record keeping requirements. Following
completion of a study, we would need to collect, analyze and present the data in an appropriate submission to the FDA, either a 510(k)
premarket notification or a PMA.

In the 510(k) process, the FDA reviews a premarket notification and determines whether or not a proposed device is “substantially
equivalent” to “predicate devices.” In making this determination, the FDA compares the proposed device to predicate devices. If the intended
use and safety and effectiveness are comparable to a predicate device, the device may be cleared for marketing. A device that raises a new
question of safety or effectiveness is not eligible for the 510(k) clearance pathway and must undergo the PMA approval process. The FDA’s
510(k) clearance pathway usually takes from 3 to 12 months, but it can last longer and clearance is never assured. In reviewing a premarket
notification, the FDA may request additional information, including clinical data. After a device receives 510(k) clearance, any modification
that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, requires a new 510(k)
clearance or could require PMA approval. The FDA requires each manufacturer to make this determination in the first instance, but the
agency can review any such decision. If the FDA disagrees with a manufacturer’s decision not to seek a new 510(k) clearance, the agency
may retroactively require the manufacturer to seek 510(k) clearance or PMA approval. The FDA also can require the manufacturer to cease
marketing and/or recall the modified device until 510(k) clearance or PMA approval is obtained. Also, the manufacturer may be subject to
significant regulatory fines or penalties.

Certain Class III devices that were on the market before May 28, 1976, known as preamendment Class III devices, and devices that are

determined to be substantially equivalent to them, can be brought to market through the 510(k) process until the FDA, by regulation, calls for
PMA applications for the devices. In addition, the FFDCA requires the FDA either to down-classify preamendment Class III devices to Class
I or Class II or to publish a classification regulation retaining the devices in Class III. Manufacturers of preamendment Class III devices that
the FDA retains in Class III must have PMA applications accepted by the FDA for filing within 90 days after the publication of a final
regulation in which the FDA calls for PMA applications. Failure to meet the deadline can lead the FDA to prevent continued marketing of the
device during the PMA application review period. Our IAB received 510(k) clearance based on a preamendment Class III device. The Impella
2.5, Impella 5.0, and Impella LD received clearance based on a preamendment Class III device. If the FDA calls for a PMA for a
preamendment Class III device, a PMA must be submitted for the device even if the device has already received 510(k) clearance; however, if
the FDA down-classifies a preamendment Class III device to Class I or Class II, a PMA application will not be required.

In April 2009, the FDA published a notice about the reclassification of certain preamendment Class III medical devices for which
regulations requiring submission of PMAs have not been issued. The FDA is seeking information to evaluate the risk-level of each type of
device and determine if the devices should be classified to require the submission of a PMA (maintained in Class III) or reclassified into Class
I or II. Manufacturers of these devices must submit the required information about their respective device/s to the FDA by August 7, 2009.
The required information will vary, but can include details about indications for use, device description, labeling, risks, summaries of
pre-clinical / clinical data, and descriptions of treatment alternatives. We are required to submit a response to an FDA request for evaluating
Class III device classes currently cleared for marketing under 510(k) regulations. We plan to comply with the FDA request by submitting the
appropriate responses for its Class III 510(k) cleared devices, which include the Impella 2.5 and Impella 5.0 catheters, and the iPulse Balloon
Catheter and Console. If the FDA does not reclassify these devices to a Class I or Class II device, we may be required to pursue PMA
approval of these devices.

The PMA approval pathway requires proof of the safety and effectiveness of the device to the FDA’s satisfaction. The PMA approval

pathway is much more costly, lengthy and uncertain than the 510(k) path. In the PMA process, the FDA examines detailed data to assess the
safety and effectiveness of the device. This information includes design, development, manufacture, labeling, advertising, preclinical testing
and clinical study data. Prior to approving the PMA, the FDA will conduct an inspection of the manufacturing facilities and the clinical sites
where the supporting study was conducted. The facility inspection evaluates the company’s compliance with the QSR. An inspection of
clinical sites evaluates compliance with the IDE requirements. Typically, the FDA will convene an advisory panel meeting to seek review of
the data presented in the PMA. The panel’s recommendation is given substantial weight, but is not binding on the agency. If the FDA’s
evaluation is favorable, the PMA is approved and the device may be marketed in the U.S. The FDA may approve the PMA with post-approval
conditions intended to ensure the safety and effectiveness of the device including, among other things, restrictions on labeling, promotion, sale
and distribution. Failure to comply with the conditions of approval can result in material adverse enforcement action, including the loss or
withdrawal of the approval. Even after approval of a PMA, a new PMA or PMA supplement is required in the event of a modification to the
device, its labeling or its manufacturing process. Supplements to a PMA often require the submission of the same type of information required
for an original PMA, except that the supplement is generally limited to that information needed to support the proposed change from the
product covered by the original PMA.

By regulation, the FDA has 180 days to review a PMA application, during which time an advisory committee may evaluate the

application and provide recommendations to the FDA. While the FDA has approved PMA applications within the allotted time period,
reviews can occur over a significantly protracted period, usually 18 to 36 months but sometimes longer, and a number of devices have never
been approved for marketing. This process is lengthy and expensive and there can be no assurance that FDA approval will be obtained.

Both a 510(k) and a PMA, if cleared or approved, may include significant limitations on the indicated uses for which a product may be

marketed. FDA enforcement policy prohibits the promotion of approved medical devices for unapproved uses. In addition, product approvals
can be withdrawn for failure to comply with regulatory requirements or the occurrence of unforeseen problems following initial marketing.

In addition, certain devices can be distributed under an HDE, rather than a PMA. In order for a device to be eligible for an HDE, a
qualifying target patient population of less than 4,000 patients per year for which there is no other available therapy must be approved by the
FDA. The FDA’s approval of an HDE to treat that qualifying patient population then requires demonstration that the device is safe for its
intended application, that it is potentially effective, and that the probable benefits outweigh the associated risks. Within the regulations for an
HDE, if a device becomes available through the PMA process that addresses the same patient population as the HDE device, the HDE device
may need to be withdrawn from the U.S. market. In January 2008 we received HDE supplement approval from the FDA for the AbioCor.

Our AB5000 and BVS 5000 systems are approved by the FDA for heart recovery for 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.
In 1992, the FDA approved our PMA for the BVS 5000. In 1996 and 1997, the FDA approved the use of the BVS 5000 for additional
indications, expanding its use to the treatment of all patients with potentially reversible heart failure. In April 2003, the AB5000 Circulatory
Support System Console and in September 2003, the AB5000 VAD were approved under PMA supplements. We received FDA clearance for
our new IAB in December 2006. Our iPulse console was approved by the FDA under a PMA supplement in December 2007. Our Impella 2.5
device received 510(k) clearance in June 2008, and we received FDA 510(k) clearance of our Impella 5.0 and Impella LD devices in April
2009, in each case for partial circulatory support for up to six hours. Our AB Portable Driver received FDA approval of our PMA supplement
in March 2009. All of these products have CE Mark approval in Europe.

Postmarket Regulation

The medical devices that we manufacture and distribute pursuant to FDA clearances or approvals are subject to continuing regulation by

the FDA and other regulatory authorities. The FDA reviews design, manufacturing, and distribution practices, labeling and record keeping,
and manufacturers’ required reports of adverse experience and other information to identify potential problems with marketed medical
devices. Among other FDA requirements, we must comply with the FDA’s good manufacturing practice regulations. These QSR regulations
govern the methods used in, and the facilities and controls used for, the design, manufacture, packaging and servicing of all finished medical
devices intended for human use. We must also comply with Medical Devices Reporting, or MDR, which requires that a firm report to the
FDA any incident in which its product may have caused or contributed to a death or serious injury, required an unnecessary intervention for a
patient, or in which its product malfunctioned and, if the malfunction were to recur, it would be likely to cause or contribute to a death or
serious injury. Labeling, advertising, and promotional activities are subject to scrutiny by the FDA and, in certain circumstances, by the
Federal Trade Commission. Current FDA enforcement policy prohibits the marketing of approved medical devices for unapproved uses.

We are subject to routine inspection by the FDA and other regulatory authorities for compliance with QSR and MDR requirements, as
well as other applicable regulations. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that
any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could ban such medical devices, detain or seize
adulterated or misbranded medical devices, order a recall, repair, replacement, or refund of such devices, and require us to notify health
professionals and others that the devices present unreasonable risks of substantial harm to the public health. The FDA may also impose
operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices, and assess civil or criminal fines
and penalties against our officers, employees, or us. The FDA may also recommend prosecution to the Department of Justice.

The FDA often requires post market surveillance, or PMS, for significant risk devices, such as VADs, that require ongoing collection of
clinical data during commercialization that must be gathered, analyzed and submitted to the FDA periodically for up to several years. These
PMS data collection requirements are often burdensome and expensive and have an effect on the PMA approval status. The failure to comply
with the FDA’s regulations can result in enforcement action, including seizure, injunction, prosecution, civil fines and penalties, recall and/or
suspension of FDA approval. The export of devices such as ours is also subject to regulation in certain instances.

The FDA, in cooperation with U.S. Customs and Border Protection, or CBP, administers controls over the import and export of medical
devices into and out of the U.S. The CBP imposes its own regulatory requirements on the import of medical devices, including inspection and
possible sanctions for noncompliance. The FDA also administers certain controls over the export of medical devices from the U.S.
International sales of our medical devices that have not received FDA approval are subject to FDA export requirements.

International Regulation

We are also subject to regulation in each of the foreign countries in which we sell our products. Many of the regulations applicable to our

products in these countries are similar to those of the FDA. The European Union requires that medical devices such as ours comply with the
Medical Device Directive or the Active Implantable Medical Device Directive, which includes quality system and CE certification
requirements. To obtain a CE Mark in the European Union, defined products must meet minimum standards of safety and quality (i.e., the
essential requirements) and then comply with one or more of a selection of conformity routes. A Notified Body assesses the quality
management systems of the manufacturer and the product conformity to the essential and other requirements within the Medical Device
Directive. In the European Union, we are also required to maintain certain International Organization for Standardization, or ISO,
certifications in order to sell our products. Our BVS 5000, AB5000, Impella products, IAB, iPulse console and Portable Driver are CE marked
and available for sale in the European Union. We are also subject to regulations in Canada (CAMCAS) and other countries where we sell our
products. Lack of regulatory compliance in any of these jurisdictions could limit our ability to distribute products in these countries.

Fraud and Abuse Laws

Our business is regulated by laws pertaining to healthcare fraud and abuse including anti-kickback laws and false claims laws. Violations

of these laws are punishable by significant criminal and civil sanctions, including, in some instances, exclusion from participation in federal
and state healthcare programs, such as Medicare and Medicaid. Because of the far-reaching nature of these laws, we may be required to alter
one or more of our practices to be in compliance with these laws. Evolving interpretations of current laws, or the adoption of new laws or
regulations, could adversely affect our arrangements with customers and physicians. In addition, any violation of these laws or regulations
could have a material adverse effect on our financial condition and results of operations.

Anti-Kickback Statute

Subject to a number of statutory exceptions, the federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting,

offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce either the referral of an
individual for, or the furnishing, recommending, or arranging for, a good or service for which payment may be made under a federal health
care program such as Medicare and Medicaid. The term “remuneration” has been broadly interpreted to include anything of value, including
gifts, discounts, the furnishing of supplies or equipment, credit arrangements, waiver of payments, and providing anything of value at less
than fair market value. The Office of the Inspector General of the U.S. Department of Health and Human Services, or the OIG, is primarily
responsible for enforcing the federal Anti-Kickback Statute and generally for identifying fraud and abuse activities affecting government
healthcare programs.

Penalties for violating the federal Anti-Kickback Statute include substantial criminal fines and/or imprisonment, substantial civil fines

and possible exclusion from participation in federal health care programs such as Medicare and Medicaid. Many states have adopted
prohibitions similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare services reimbursed by
any source, not only by the Medicare and Medicaid programs and do not include comparable exceptions.

The OIG has issued safe harbor regulations that identify activities and business relationships that are deemed safe from prosecution under

the federal Anti-Kickback Statute. There are safe harbors for various types of arrangements, including certain investment interests, leases,
personal service arrangements, and management contracts. The failure of a particular activity to comply with all requirements of an applicable
safe harbor regulation does not mean that the activity violates the federal Anti-Kickback Statute or that prosecution will be pursued. However,
activities and business arrangements that do not fully satisfy each applicable safe harbor may result in increased scrutiny by government
enforcement authorities such as the OIG.

We have various arrangements with customers and physicians that may implicate these laws. For example, some physicians who use our
products also provide medical advisory and other consulting and personal services. Some of these physician arrangements may not meet Anti-
Kickback Statute safe harbor protections, which may result in increased scrutiny by government authorities having responsibility for enforcing
these laws. Additionally, we do not maintain a formal compliance plan concerning interactions with healthcare professionals nor have we
formally adopted the recommendations issued by the OIG. The OIG may interpret the absence of such formal plan negatively in the case of an
enforcement action, which could result in a material adverse effect on our financial condition and results of operations. Further, the absence of
a formal compliance plan causes us to be out of compliance with certain state laws — such as in Nevada and California — that require drug
and device companies to have formal compliance plans. We are in the process of adopting a formal compliance plan under recently enacted
laws in Massachusetts, the adoption of which should put us in compliance with laws in Nevada and California as well.

If our operations are found to be in violation of these or similar laws or regulations, we or our officers may face significant civil and
criminal penalties, damages, fines, imprisonment, and exclusion from the Medicare and Medicaid programs. Any violations may lead to
curtailment or restructuring of our operations. Any penalties, damages, fines, or curtailment or restructuring of our operations could adversely
affect our ability to operate our business and our financial results. The risk of our being found in violation of these laws is increased by the
fact that some of these laws are open to a variety of interpretations. Any action against us for violation of these laws, even if we successfully
defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and
damage our reputation. If enforcement action were to occur, our reputation and our business and financial condition could be harmed, even if
we were to prevail or settle the action. Similarly, if the physicians or other providers or entities with whom we do business are found not to
comply with applicable laws, they may be subject to sanctions, which could also have a negative impact on our business.

Federal False Claims Act

The federal False Claims Act prohibits the knowing filing or causing the filing of a false claim or the knowing use of false statements to
obtain payment from the federal government. When an entity is determined to have violated the False Claims Act, it must pay three times the
actual damages sustained by the government, plus mandatory civil penalties for each separate false claim. Private individuals can file suits
under the False Claims Act on behalf of the government. These lawsuits are known as “qui tam” actions, and the individuals bringing such
suits, sometimes known as “relators” or, more commonly, “whistleblowers,” may share in any amounts paid by the entity to the government

in fines or settlement. In addition, certain states have enacted laws modeled after the federal False Claims Act. Qui tam actions have increased
significantly in recent years, causing greater numbers of healthcare companies to have to defend a false claim action, pay fines or be excluded
from Medicare, Medicaid or other federal or state healthcare programs as a result of an investigation arising out of such action.

HIPAA

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, created two new federal crimes: healthcare fraud and false
statements relating to healthcare matters. The healthcare fraud statute prohibits knowingly and willfully executing, or attempting to execute, a
scheme to defraud any healthcare benefit program, including private payers. A violation of this statute is a felony and may result in fines,
imprisonment or exclusion from government-sponsored programs. The false statements statute prohibits knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of
or payment for healthcare benefits, items or services. A violation of this statute is a felony and may result in fines or imprisonment.

HIPAA also protects the security and privacy of individually identifiable health information maintained or transmitted by healthcare
providers, health plans and healthcare clearinghouses. HIPAA restricts the use and disclosure of patient health information, including patient
records. Although we believe that HIPAA does not apply to us directly, most of our customers have significant obligations under HIPAA, and
we intend to cooperate with our customers and others to ensure compliance with HIPAA with respect to patient information that comes into
our possession. Failure to comply with HIPAA obligations can entail criminal penalties. Some states have also enacted rigorous laws or
regulations protecting the security and privacy of patient information. If we fail to comply with these laws and regulations, we could face
additional sanctions.

Employees

As of March 31, 2009, we had 386 full-time employees, including:

•

103 in product engineering, research and development, and regulatory;

119 in sales, clinical support, marketing and field service;

97 in manufacturing and quality control; and

67 in general and administration.

We routinely enter into contractual agreements with our employees, which typically include confidentiality and non-competition

commitments. Our employees are not represented by unions. We consider our employee relations to be good. If we were unable to attract and
retain qualified personnel in the future, our operations could be negatively impacted.

Our Corporate Information

We are a Delaware corporation and commenced operations in 1981. Our principal executive offices are located at 22 Cherry Hill Drive,

Danvers, Massachusetts 01923, and our telephone number is (978) 646-1400. Our web address is www.abiomed.com. We make available free
of charge through the Investors section of our website, all reports filed with the Securities and Exchange Commission. We do not incorporate
the information on our website into this report, and you should not consider it part of this report.

ITEM 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk. Before making an investment decision, you should carefully consider

these risks as well as the other information we include or incorporate by reference in this report, including our consolidated financial
statements and the related notes. The risks and uncertainties we have described are not the only ones we face. Additional risks and
uncertainties of which we are unaware or that we deem immaterial may also adversely affect our business. If any of these risks materializes,
the trading price of our common stock could fall and you might lose all or part of your investment.

This section includes or refers to forward-looking statements. You should read the explanation of the qualifications and limitations on

such forward-looking statements discussed at the beginning of the report.

Risks Related to Our Business

We have not operated at a profit and do not expect to be profitable in our fiscal year 2010.

We have incurred net losses in each of the past three fiscal years and for most of our history. We plan to make significant expenditures in

fiscal 2010 and subsequent fiscal years for, among other things, the expansion of our global distribution network and ongoing product
development, which we expect will result in losses in our fiscal year 2010 and potentially in future periods. These expenditures include costs
associated with hiring additional personnel, performing clinical trials, continuing our research and development relating to our products under
development, seeking regulatory approvals and, if we receive these approvals, commencing commercial manufacturing and marketing
activities. The amount of these expenditures is difficult to forecast accurately and cost overruns may occur. We also expect that we will need
to make significant expenditures to begin to market and manufacture in commercial quantities our recently approved circulatory care products,
and any other new products for which we may receive regulatory approvals or clearances in the future.

If we fail to obtain and maintain necessary governmental approvals for our products and indications, we may be unable to market and sell
our products in certain jurisdictions.

Medical devices such as ours are extensively regulated by the FDA in the U.S. and by other federal, state, local and foreign authorities.

Governmental regulations relate to the testing, development, manufacturing, labeling, design, sale, promotion, distribution, importing,
exporting and shipping of our products. In the U.S., before we can market a new medical device, or a new use of, or claim for, or significant
modification to, an existing product, we must generally first receive either a premarket approval, or PMA, or 510(k) clearance from the FDA.
Both of these processes can be expensive and lengthy and entail significant expenses. The FDA’s 510(k) clearance process usually takes from
three to 12 months, but it can often last longer. The process of obtaining premarket approval is much more costly and uncertain than the
510(k) clearance process. It generally takes from one to three years, or even longer, from the time the PMA application is submitted to the
FDA. We cannot assure you that any regulatory clearances or approvals, either foreign or domestic, will be granted on a timely basis, if at all.
If we are unable to obtain regulatory approvals or clearances for use of our products under development, or if the patient populations for
which they are approved are not sufficiently broad, the commercial success of these products could be limited. The FDA may also limit the
claims that we can make about our products.

If we do not receive FDA approval or clearance for one or more of our products, we will be unable to market and sell those products in
the U.S. which would have a material adverse effect on our operations and prospects. Although we received 510(k) clearance of our Impella
2.5 device in June 2008 for partial circulatory support for up to six hours, we are also pursuing premarket approval for the Impella 2.5 for
additional indications.

Historically, certain Class III devices that were on the market before May 28, 1976, known as preamendment Class III devices, and
devices that are determined to be substantially equivalent to them, could be brought to market through the 510(k) process. In April 2009, the
FDA published new regulations requiring manufacturers of certain Class III preamendment devices to submit to the FDA a summary of, and
citation to, any known, or otherwise available, safety or efficacy information by August 7, 2009. Based on the safety information a
manufacturer submits to the FDA concerning its medical device product, the agency can make a determination concerning whether the
product must seek PMA approval, or whether the class III device can be reclassified as a class I or class II device, and therefore remain
available for sale under the 510(k) clearance. We are required to submit a response to an FDA request for evaluating Class III device classes
currently cleared for marketing under 510(k) regulations. We plan to comply with the FDA request by submitting the appropriate responses
for its Class III 510(k) cleared devices, which include the Impella 2.5 and Impella 5.0 catheters, and the iPulse Balloon Catheter and Console.
If the FDA does not reclassify these devices to a Class I or Class II device, we may be required to pursue PMA approval of these devices. Our
understanding of the timeframe for the FDA’s decision to reclassify all of the product classes is that it will be a multiple year process,
including a 30 month window after the FDA final decision on classification, during which we can continue to market each of the devices, so
long as we are in the process of obtaining a PMA. There is no guarantee as to whether we will receive PMA approval for these devices and
how long a PMA approval will take to obtain. If we are unable to market and sell those products in the U.S. it would have a material adverse
effect on our revenues, operations and prospects.

We intend to market our new products in international markets, including the European Union, Canada, and Japan. Approval processes

differ among those jurisdictions and approval in the U.S. or any other single jurisdiction does not guarantee approval in any other jurisdiction.
Obtaining foreign approvals could involve significant delays, difficulties and costs for us and could require additional clinical trials.

Our current and planned clinical trials may not begin on time, or at all, and may not be completed on schedule, or at all.

In order to obtain premarket approval and in some cases, a 510(k) clearance, we may be required to conduct well-controlled clinical trials

designed to test the safety and effectiveness of the product. In order to conduct clinical studies, we must generally receive an investigational
device exemption, or IDE, for each device from the FDA. An IDE allows us to use an investigational device in a clinical trial to collect data
on safety and effectiveness that will support an application for premarket approval or 510(k) clearance from FDA. We have received IDE
approval and are conducting clinical trials for our Impella 2.5, Impella 5.0, and Portable Driver.

Conducting clinical trials is a long, expensive and uncertain process that is subject to delays and failure at any stage. Clinical trials can

take months or years to complete. The commencement or completion of any of our clinical trials may be delayed or halted for numerous
reasons, including:

•

the FDA may not approve a clinical trial protocol or a clinical trial, or may place a clinical trial on hold;

subjects may not enroll in clinical trials at the rate we expect and/or subjects may not be followed-up on at the rate we expect;

subjects may experience adverse side effects or events related or unrelated to our products;

third-party clinical investigators may not perform our clinical trials on our anticipated schedule or consistent with the clinical trial
protocol and good clinical practices, or other third-party organizations may not perform data collection and analysis in a timely or
accurate manner;

the interim results of any of our clinical trials may be inconclusive or negative;

regulatory inspections of our clinical trials or manufacturing facilities may require us to undertake corrective action or suspend or
terminate our clinical trials if investigators find us not to be in compliance with regulatory requirements;

510(k) clearance of our devices may have the effect of slowing down the progress of related clinical trials since physicians can use
our cleared devices commercially outside of the trials;

our manufacturing process may not produce finished products that conform to design and performance specifications; or

governmental regulations or administrative actions may change and impose new requirements, particularly on reimbursement.

The results of pre-clinical studies do not necessarily predict future clinical trial results and previous clinical trial results may not be

repeated in subsequent clinical trials. A number of companies in the medical industry have suffered delays, cost overruns and project
terminations despite achieving promising results in pre-clinical testing or early clinical testing. In addition, the data obtained from clinical
trials may be inadequate to support approval or clearance of a submission. The FDA may disagree with our interpretation of the data from our
clinical trials, or may find the clinical trial design, conduct or results inadequate to demonstrate the safety and effectiveness of the product
candidate. The FDA may also require us to conduct additional pre-clinical studies or clinical trials which could further delay approval of our
products. If we are unable to receive FDA approval of an IDE to conduct clinical trials or the trials are halted by the FDA or others or if we
are unsuccessful in receiving FDA approval of a product candidate, we would not be able to sell or promote the product candidate in the U.S.,
which could seriously harm our business. Moreover, we face similar risks in each other jurisdiction in which we sell or propose to sell our
products.

If we make modifications to a product, whether in response to results of clinical testing or otherwise, we could be required to start our
clinical trials over, which could cause serious delays that would adversely affect our results of operations. Even modest changes to certain
components of our products could result in months or years of additional clinical trials.

If we do not effectively manage our growth, we may be unable to successfully develop, market and sell our products.

Our future revenue and operating results will depend on our ability to manage the anticipated growth of our business. Since 2004, we
have experienced significant growth in the scope of our operations and the number of our employees, including the addition of our operations
in Germany, France, the United Kingdom, and Ireland. This growth has placed significant demands on our management as well as our
financial and operations resources. In order to achieve our business objectives, we will need to continue to grow. However, continued growth
presents numerous challenges, including:

•

developing our global sales and marketing infrastructure and capabilities;

expanding manufacturing capacity, maintaining quality and increasing production;

•

expansion of foreign regulatory compliance capabilities;

implementing appropriate operational and financial systems and controls;

identifying, attracting and retaining qualified personnel, particularly experienced clinical staff; and

training, managing and supervising our personnel worldwide.

Any failure to manage our growth effectively could impede our ability to successfully develop, market and sell our products, which could

seriously harm our business.

The demand for many of our products and products under development is unproven, and we may be unable to successfully commercialize
our products.

Our products and products under development may not enjoy commercial acceptance or success, which could adversely affect our

business and results of operations. We need to create markets for our Impella micro heart pumps, AB5000, IAB, iPulse console, Portable
Driver, AbioCor, AbioCor II and other new or future products, including achieving market acceptance among physicians, medical centers,
patients and third-party payers. In particular, we need to gain acceptance of our Impella products among interventional cardiologists, who
have not previously been users of our other devices. The obstacles we will face in trying to create successful commercial markets for our
products include:

•

limitations inherent in first-generation devices, and the potential failure to develop successive improvements, including increases in
service life;

the introduction by other companies of new treatments, products and technologies that compete with our products;

the timing and amount of reimbursement for these products, if any, by third-party payers;

the potential reluctance of clinicians to obtain adequate training to use our products or to use new products;

the lifestyle limitations that patients will have to accept for our AbioCor and AbioCor II products; and

the potential reluctance of physicians, patients and society as a whole to accept medical devices that replace or assist the heart or the
finite life and risk of mechanical failure inherent in such devices.

The commercial success of our products will require acceptance by surgeons and interventional cardiologists, a limited number of whom

have significant influence over medical device selection and purchasing decisions.

We may achieve our business objectives only if our products are accepted and recommended by leading cardiovascular surgeons and
interventional cardiologists, whose decisions are likely to be based on a determination by these clinicians that our products are safe and cost-
effective and represent acceptable methods of treatment. Although we have developed relationships with leading cardiac surgeons, the
commercial success of our Impella products, IAB and iPulse console will require that we also develop relationships with leading
interventional cardiologists in cath labs, where we do not yet have a significant presence. We cannot assure you that we can maintain our
existing relationships and arrangements or that we can establish new relationships in support of our products. If cardiovascular surgeons and
interventional cardiologists do not consider our products to be adequate for the treatment of our target cardiac patient population or if a
sufficient number of these clinicians recommend and use competing products, it would seriously harm our business.

The training required for clinicians to use our products could reduce the market acceptance of our products and reduce our revenue.

Clinicians must be trained to use our products proficiently. It is critical to the success of our sales efforts that we ensure that there are a
sufficient number of clinicians familiar with, trained on and proficient in the use of our products. Convincing clinicians to dedicate the time
and energy necessary to obtain adequate training in the use of our products is challenging and we may not be successful in these efforts. If
clinicians are not properly trained, they may misuse or ineffectively use our products. Any improper use of our products may result in
unsatisfactory outcomes, patient injury, negative publicity or lawsuits against us, any of which could harm our reputation and product sales.
Furthermore, our inability to educate and train clinicians to use our products may lead to inadequate demand for our products.

Our products are subject to extensive regulatory requirements, including continuing regulatory review, which could affect the

manufacturing and marketing of our products.

The FDA and other regulatory agencies continue to review products even after they have received initial approval. If and when the FDA

or another regulatory agency clears or approves our products under development, the manufacture and marketing of these products will be
subject to continuing regulation, including compliance with the FDA’s adverse event reporting requirements, prohibitions on promoting a
product for unapproved uses, and Quality System Regulation, or QSR, requirements, which obligate manufacturers, including third-party and
contract manufacturers, to adhere to stringent design, testing, control, documentation and other quality assurance procedures during the design
and manufacture of a device.

Any modification to an FDA-cleared device that could significantly affect its safety or effectiveness or that would constitute a major

change in its intended use, requires a new 510(k) clearance or PMA approval. The FDA requires each manufacturer to make this
determination in the first instance, but the FDA may review any such decision. Modifications of this type are common with new products. We
anticipate that the first generation of each of our products will undergo a number of changes, refinements and improvements over time. For
example, the current configuration of the AbioCor’s thoracic unit, or “replacement heart,” is sized for patients with relatively large chest
cavities and we anticipate that we will need to obtain regulatory approval of thoracic units of other sizes, such as the AbioCor II. If the FDA
requires us to seek clearance or approval for modification of a previously cleared product for which we have concluded that new clearances or
approvals are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain clearance or approval and
we may be subject to significant regulatory fines or penalties, which could have a material adverse effect on our financial results and
competitive position. We also cannot assure you that we will be successful in obtaining clearances or approvals for our modifications, if
required. We and our third-party suppliers of product components are also subject to inspection and market surveillance by the FDA and other
regulatory agencies for QSR and other requirements, the interpretation of which can change. Compliance with QSR and similar legal
requirements can be difficult and expensive. Enforcement actions resulting from failure to comply with government requirements could result
in fines, suspensions of approvals or clearances, recalls or seizure of products, operating restrictions or shutdown, and criminal prosecutions
that could adversely affect the manufacture and marketing of our products. The FDA or another regulatory agency could withdraw a
previously approved product from the market upon receipt of newly discovered information, including a failure to comply with regulatory
requirements, the occurrence of unanticipated problems with products following approval, or other reasons, which could adversely affect our
operating results.

Even after receiving regulatory clearance or approval, our products may be subject to product recalls which may harm our reputation and

divert our managerial and financial resources.

The FDA and similar governmental authorities in other countries have the authority to order mandatory recall of our products or order

their removal from the market if the governmental entity finds that our products might cause adverse health consequences or death. A
government-mandated or voluntary recall by us could occur as a result of component failures, manufacturing errors or design defects,
including labeling defects. We have in the past initiated voluntary recalls of some of our products and we could do so in the future. Any recall
of our products may harm our reputation with customers and divert managerial and financial resources.

Our AB5000 and BVS 5000 are vulnerable to competitive pressures.

Until recently, we have derived most of our product revenues from sales of the AB5000 and BVS 5000. Revenues from these products,

especially the BVS 5000, have been declining in recent quarters. If another company were to introduce new treatments, products or
technologies that compete with our products, add new features to its existing products or reduce its prices to make its products more
financially attractive to customers, revenue from our AB5000 and BVS 5000 could decline further. For example, in the event of the expansion
of technologies that allow heart surgical procedures to be performed without stopping the heart, a reduction in the market for these products
could result. In addition, variations in the quantity and timing of sales of our consoles have a disproportionate effect on our revenues, because
the price of a console is substantially greater than the price of our disposable blood pumps. The higher price of our consoles may limit sales of
our consoles in the future by third-party payers. If we cannot maintain and increase our disposable revenues from our AB5000 and BVS 5000,
our overall business and financial condition could be adversely affected.

If we are unable to develop additional, high-quality manufacturing capacity, our growth may be limited and our business could be

seriously harmed.

To be successful, we believe we will need to increase our manufacturing capacity. In July 2008, we executed a lease for a facility in
Athlone, Ireland, in which we are establishing a high-throughput manufacturing facility for the production of our Impella products. We do not
have experience in manufacturing our Impella products in the commercial quantities that might be required to meet potential demand, nor do
we have experience manufacturing our other products in large quantities. We may encounter difficulties in scaling up manufacturing of our
products, including problems related to product yields, quality control and assurance, component and service availability, adequacy of control
policies and procedures and lack of skilled personnel. If we cannot hire, train and retain enough experienced and capable scientific and
technical workers, we may not be able to manufacture sufficient quantities of our current or future products at an acceptable cost and on time,

which could limit market acceptance of our products or otherwise damage our business. We expect our Ireland facility to be operational by the
end of fiscal year 2010. If we are unable to get our Ireland facility operational by the time we expect, it could inhibit our revenue growth.

Each of our products is currently manufactured in a single location, and any significant disruption in production could impair our ability

to deliver our products.

We currently manufacture our Impella heart pumps at our facility in Aachen, Germany and we manufacture our other products at our
facility in Danvers, Massachusetts. In addition, we expect our Ireland facility, in which we are establishing a high-throughput manufacturing
facility for the production of our Impella products, to be operational by the end of fiscal year 2010. Events such as fire, flood, power loss or
other disasters could prevent us from manufacturing our products in compliance with applicable FDA and other regulatory requirements,
which could result in significant delays before we restore production or commence production at another site. These delays may result in lost
sales. Our insurance may not be adequate to cover our losses resulting from disasters or other business interruptions. Any significant
disruption in the manufacturing of our products could seriously harm our business and results of operations. In addition, if we are unable to
get our Ireland facility operational on a timely basis as a result of disasters or other business interruptions, it could inhibit our revenue growth.

Any failure to achieve and maintain the high manufacturing standards that our products require may seriously harm our business.

Our products require precise, high-quality manufacturing. Achieving precision and quality control requires skill and diligence by our

personnel. Our failure to achieve and maintain these high manufacturing standards, including the incidence of manufacturing errors, design
defects or component failures, could result in patient injury or death, product recalls or withdrawals, delays or failures in product testing or
delivery, cost overruns or other problems that could seriously hurt our business. We have from time to time voluntarily recalled certain
products. Despite our very high manufacturing standards, we cannot completely eliminate the risk of errors, defects or failures. If we are
unable to manufacture the AB5000, BVS 5000, Impella products, Portable Driver and iPulse console in accordance with necessary quality
standards, or if we are unable to procure additional high-quality manufacturing facilities, our business and results of operations may be
negatively affected.

Our AbioCor products involve even greater manufacturing complexities than our other current commercial products, such as our BVS

5000, AB5000, and Impella products. Our AbioCor products must be significantly more durable and meet different standards, which may be
more difficult to achieve, than those that apply to our current products. If we are unable to manufacture our AbioCor products or other future
products on a timely basis at acceptable quality and cost, or if we experience unanticipated technological problems or delays in production,
our business will suffer.

We depend on third-party reimbursement to our customers for market acceptance of our products. If third-party payers fail to provide
appropriate levels of reimbursement for purchase and use of our products, our sales and profitability would be adversely affected.

Sales of medical devices largely depend on the reimbursement of patients’ medical expenses by government health care programs and

private health insurers. Without the financial support of government reimbursement or third-party insurers’ payments for patient care, the
market for our products will be limited. Medical products and devices incorporating new technologies are closely examined by governments
and private insurers to determine whether the products and devices will be covered by reimbursement, and if so, the level of reimbursement
which may apply.

We cannot be sure that additional third-party payers will cover and/or adequately reimburse sales of our products or other products under

development, to enable us to sell them at profitable prices.

In addition, third-party payers are increasingly requiring evidence that medical devices are cost-effective. If we are unable to meet the

standards of a third-party payer, that payer may not reimburse the use of our products, which could reduce sales of our products to healthcare
providers who depend upon reimbursement for payment. We also cannot be sure that third-party payers will continue the current level of
reimbursement to physicians and medical centers for use of our AB5000, BVS 5000, Impella products, Portable Driver, and iPulse console.
Any reduction in the amount of this reimbursement could harm our business.

Changes in health care reimbursement systems in the U.S. and abroad could reduce our revenues and profitability.

The Federal government is considering ways to change, and has changed, the manner in which healthcare services are provided and paid

for in the U.S. Occasionally, the U.S. Congress passes laws that impact reimbursement for health care services, including reimbursement to
hospitals and physicians. States may also enact legislation that impacts Medicaid payments to hospitals and physicians. In addition, the
Centers for Medicare & Medicaid Services, the Federal agency responsible for administering the Medicare program, establishes payment
levels for hospitals and physicians on an annual basis, which can increase or decrease payment to such entities.

In particular, the new administration has set in motion a number of proposed initiatives to reform healthcare and contain costs, and we
cannot predict how pending and future legislative and regulatory proposals would influence the manner in which medical devices, including

ours, are purchased or covered and reimbursed. For example, the American Recovery and Reinvestment Act of 2009, also known as the
stimulus package, includes $1.1 billion in funding to study the comparative effectiveness of health care treatments and strategies. This funding
will be used, among other things, to conduct, support or synthesize research that compares and evaluates the risk and benefits, clinical
outcomes, effectiveness and appropriateness of medical products. Although Congress has indicated that this funding is intended to improve
the quality of health care, it remains unclear how the research will impact coverage, reimbursement or other third-party payor policies. To the
extent these or other reform measures impact the coverage and reimbursement of our current or future products, our revenues and results of
operations could be adversely impacted.

Internationally, medical reimbursement systems vary significantly from country to country, with some countries limiting medical centers’

spending through fixed budgets, regardless of levels of patient treatment, and other countries requiring application for, and approval of,
government or third-party reimbursement. Even if we succeed in bringing our new products to market, uncertainties regarding future
healthcare policy, legislation and regulation, as well as private market practices, could affect our ability to sell our products in commercially
acceptable quantities at profitable prices.

We must comply with healthcare “fraud and abuse” laws, and we could face substantial penalties for non-compliance and be excluded
from government healthcare programs, which would adversely affect our business, financial condition and results of operations.

Our business is regulated by laws pertaining to healthcare fraud and abuse, including:

•

the Federal Anti-Kickback Statute, which prohibits persons from knowingly and willfully soliciting, offering, receiving or providing
remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce either the referral of an individual for, or the
furnishing, recommending, or arranging for, a good or service for which payment may be made under a federal healthcare program
such as Medicare and Medicaid; and

•

state law equivalents to the Anti-Kickback Statute, which may not be limited to government-reimbursed items.

We have various arrangements with customers that may implicate these laws. For example, some physicians who use our products also

provide medical advisory and other consulting and personal services. Some of these physician arrangements may not meet Anti-Kickback
Statute safe harbor requirements, which may result in increased scrutiny by government authorities having responsibility for enforcing these
laws. Additionally, we do not maintain a formal compliance plan concerning interactions with healthcare professionals nor have we formally
adopted the recommendations issued by the Office of Inspector General of the U.S. Department of Health and Human Services, or OIG. The
OIG may interpret the absence of such formal plan negatively in the case of an enforcement action, which could result in a material adverse
effect on our financial condition and results of operations. Further, the absence of a formal compliance plan causes us to be out of compliance
with certain state laws — such as in Nevada and California — that require drug and device companies to have formal compliance plans. We
are in the process of adopting a formal compliance plan under recently enacted laws in Massachusetts, the adoption of which should put us in
compliance with the Nevada and California laws as well.

If our operations are found to be in violation of any of these or similar laws or regulations, we or our officers may face significant civil
and criminal penalties, damages, fines, imprisonment and exclusion from the Medicare and Medicaid programs. Any violations may lead to
curtailment or restructuring of our operations, which could adversely affect our ability to operate our business and our financial results. The
risk of our being found in violation of these laws is increased by the fact that many of these laws are open to a variety of interpretations. Any
action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert
our management’s attention from the operation of our business and damage our reputation. If enforcement action were to occur, our reputation
and our business and financial condition may be harmed, even if we were to prevail or settle the action. Similarly, if the physicians or other
providers or entities with whom we do business are found not to comply with applicable laws, they may be subject to sanctions, which could
also have a negative impact on our business.

If we cannot attract and retain key management, scientific, sales and other personnel we need, we will not be successful.

We depend heavily on the contributions of the principal members of our business, financial, technical, sales and support, regulatory and

clinical, operating and administrative management and staff, many of whom would be difficult to replace. Our key personnel include our
senior officers, many of whom have very specialized scientific, medical or operational knowledge. The loss of the service of any of the key
members of our senior management team may significantly delay or prevent our achievement of our business objectives. Our ability to attract
and retain qualified personnel, consultants and advisors is critical to our success. For example, many of the members of our clinical staff are
registered nurses with experience in the surgery suite or cath lab, only a limited number of whom seek employment with a company like ours.
Competition for skilled and experienced management, scientific, clinical and sales personnel in the medical devices industry is intense. We
face intense competition for skilled and experienced management, scientific, clinical and sales personnel from numerous medical device and
life sciences companies, universities, governmental entities and other research institutions. If we lose the services of any of the principal
members of our management and staff, or if we are unable to attract and retain qualified personnel in the future, especially scientific and sales
personnel, our business could be adversely affected.

If our suppliers cannot provide the components we require, our ability to manufacture our products could be harmed.

We rely on third-party suppliers to provide us with some components used in our existing products and products under development. For
example, we outsource the manufacturing of all of our consoles other than final assembly and testing. Relying on third-party suppliers makes
us vulnerable to component part failures and to interruptions in supply, either of which could impair our ability to conduct clinical tests or to
ship our products to our customers on a timely basis. Using third-party vendors makes it difficult and sometimes impossible for us to test fully
certain components, such as components on circuit boards, maintain quality control, manage inventory and production schedules and control
production costs. Manufacturers of our product components may be required to comply with the FDA or other regulatory manufacturing
regulations and to satisfy regulatory inspections in connection with the manufacture of the components. Any failure by a supplier to comply
with applicable requirements could lead to a disruption in supply. Vendor lead times to supply us with ordered components vary significantly
and often can exceed six months or more. Both now and as we expand our manufacturing capacity, we cannot be sure that our suppliers will
furnish us required components when we need them. These factors could make it more difficult for us to manufacture our products effectively
and efficiently and could adversely impact our results of operations.

Some of our suppliers may be the only source for a particular component, which makes us vulnerable to significant cost increases. Sole
source vendors may decide to limit or eliminate sales of certain components to the medical industry due to product liability or other concerns
and we might not be able to find a suitable replacement for those products. Our inventory may run out before we find alternative suppliers and
we might be forced to purchase substantial inventory, if available, to last until we qualify an alternate supplier. If we cannot obtain a necessary
component, we may need to find, test and obtain regulatory approval or clearance for a replacement component, produce the component
ourselves or redesign the related product, which would cause significant delay and could increase our manufacturing costs. Any of these
events could adversely impact our results of operations.

We may not be successful in expanding our direct sales activities into international markets.

We are seeking to expand our international sales of the AB5000, Portable Driver, iPulse console, and Impella circulatory assist systems,

by recruiting direct sales and support teams outside the U.S. Our international operations in Germany, France, Ireland, and the United
Kingdom will be subject to a number of risks, which may vary from the risks we experience in the U.S., including:

•

the need to obtain regulatory approvals in foreign countries before our products may be sold or used;

the need to procure reimbursement for our products in each foreign market;

the generally lower level of reimbursement available in foreign markets relative to the U.S.;

longer sales cycles;

limited protection of intellectual property rights;

difficulty in collecting accounts receivable;

fluctuations in the values of foreign currencies; and

political and economic instability.

If we are unable to effectively expand our sales activities in international markets, our results of operations could be negatively impacted.

We intend to expand our reliance on distributors in some international markets and poor performance by a distributor could reduce our
sales and harm our business.

We rely on distributors to market and sell our products in parts of Europe, Asia, South America and Australia. Many of these distributors
have the exclusive right to distribute our products in their territory. We may hire distributors to market our products in additional international
markets. Our success in these markets will depend almost entirely upon the efforts of our distributors, over whom we have little or no control.
If a distributor does not market and sell our products aggressively, we could lose sales and impair our ability to compete in that market. We
are also subject to credit risk associated with shipments to our distributors and this could negatively impact our financial condition and
liquidity in the future.

Our operating results may fluctuate unpredictably.

Historically, our annual and quarterly operating results have fluctuated widely and we expect these fluctuations to continue. Among the

factors that may cause our operating results to fluctuate are:

•

the timing of customer orders and deliveries, particularly for our consoles, which are substantially more expensive than our
disposable products;

competitive changes, such as price changes or new product introductions that we or our competitors may make;

the timing of regulatory actions, such as product approvals or recalls;

costs we incur developing and testing our Impella heart pumps, IAB, Portable Driver, iPulse console, AbioCor, AbioCor II and any
other product products;

costs we incur in anticipation of future sales, such as inventory purchases, expansion of manufacturing facilities, or establishment of
international sales offices;

the effect of fluctuations in currency exchange rates on our results of operations;

economic conditions in the healthcare industry; and

efforts by governments, insurance companies and others to contain health care costs, including changes to reimbursement policies.

We believe that period-to-period comparisons of our historical results are not necessarily meaningful, and investors should not rely on
them as an indication of our future performance. To the extent we experience the factors described above, our future operating results may not
meet the expectations of securities analysts or investors from time to time, which may cause the market price of our common stock to decline.

We may be unable to obtain any benefit from our net operating loss carryforwards and research and development credit carryforwards.

At March 31, 2009, we had federal and state net operating loss (“NOL”) carryforwards of approximately $145.1 million and $97.1

Due to uncertainties surrounding our ability to generate future taxable income to realize these assets, a full valuation allowance has been

established to offset our net deferred tax assets and liabilities. Additionally, the future utilization of our NOL and research and development
credit carry forwards to offset future taxable income may be subject to a substantial annual limitation under Section 382 of the Internal
Revenue Code due to ownership changes that have occurred previously or that could occur in the future. Ownership changes, as defined in
Section 382 of the Internal Revenue Code, can limit the amount of NOL’s and research and development credit carry forwards that a company
can use each year to offset future taxable income and taxes payable. We believe that all of our federal and state NOL’s are available for
carryforward to future tax periods, subject to the statutory maximum carryforward limitation of any annual NOL. Any future potential
limitation to all or a portion of the NOL or research and development credit carry forwards, before they can be utilized, would reduce our
gross deferred tax assets. We will monitor subsequent ownership changes, which could impose limitations in the future.

Our future success depends in part on the development of new circulatory assist products, and our development efforts may not be
successful.

We are devoting our major research and development and regulatory efforts, and significant financial resources, to the development of
our Impella heart pumps, iPulse console, Portable Driver, AbioCor and product extensions of existing commercial products and new products.
The development of new products and product extensions presents enormous challenges in a variety of areas, many or all of which we may
have difficulty in overcoming, including blood compatible surfaces, blood compatible flow, manufacturing techniques, pumping mechanisms,
physiological control, energy transfer, anatomical fit and surgical techniques. We may be unable to overcome all of these challenges, which
could adversely affect our results of operations and prospects.

We may not have sufficient funds to develop and commercialize our new products.

The development, manufacture and sale of any medical device in the U.S. and abroad is very expensive. We cannot be sure that we will

have the necessary funds to develop and commercialize our new products, or that additional funds will be available on commercially
acceptable terms, if at all. If we are unable to obtain the necessary funding to develop and commercialize our products, our business may be
adversely affected. We believe we have sufficient liquidity to finance our operations for the next fiscal year. We also may evaluate from time
to time other financing alternatives as necessary to fund operations.

Our marketable securities are subject to market risks and decreased liquidity.

Marketable securities at March 31, 2009 consist of $7.0 million in the Columbia Fund and $52.1 million in four funds that invest in U.S.

backed government securities. In December 2007, the Columbia Fund ceased accepting redemption requests from investors and changed its
method of valuing the securities in the Columbia Fund to market value rather than amortized cost. We deemed that the unrealized loss on the
Columbia Fund was not temporary as the market value of the Columbia Fund was approximately 83% of its carrying value as of March 31,
2009, and we do not expect to recover the loss of value in liquidation. This determination of the fair value of our holdings in the Columbia
Fund requires significant judgment or estimation. As discussed in Note 4 to our financial statements, certain of these securities were valued
primarily using broker pricing models that incorporate transaction details such as contractual terms, maturity, timing and amount of future
cash inflows, as well as assumptions about liquidity. The Columbia Fund has been partially liquidated during fiscal 2008 and 2009 and is
expected to continue making redemptions through the next twelve months. Since December 6, 2007 and through May 27, 2009, we have
received disbursements of approximately $40 million from the Columbia Fund with the most recent disbursement occurring on May 27, 2009
at approximately 86% of its original value. We have recorded $3.7 million of the Columbia Fund as long-term marketable securities at
March 31, 2009 because Bank of America, the sponsor of the Columbia Fund, has indicated that it cannot predict with certainty whether or
not the Columbia Fund will redeem this amount within the next year. We expect conditions in the credit markets to remain uncertain for the
foreseeable future. While it is our intent to liquidate securities in the Columbia Fund in future periods to reduce our exposure to future
deterioration of these securities, we believe that operating results or cash flows could be affected significantly by fair value adjustments to the
Columbia Fund. There can be no assurance that we will not have to take additional losses on the Columbia Fund.

We own patents, trademarks, trade secrets, copyrights and other intellectual property and know-how that we believe gives us a competitive
advantage. If we cannot protect our intellectual property and develop or otherwise acquire additional intellectual property, competition
could force us to lower our prices, which could hurt our profitability.

Our intellectual property rights are and will continue to be a critical component of our success. A substantial portion of our intellectual

property rights relating to the AB5000, BVS 5000, Impella products, AbioCor, AbioCor II and other products under development is in the
form of trade secrets, rather than patents. Unlike patents, trade secrets are only recognized under applicable law if they are kept secret by
restricting their disclosure to third parties. We protect our trade secrets and proprietary knowledge in part through confidentiality agreements
with employees, consultants and other parties. However, certain consultants and third parties with whom we have business relationships, and
to whom in some cases we have disclosed trade secrets and other proprietary knowledge, may also provide services to other parties in the
medical device industry, including companies, universities and research organizations that are developing competing products. In addition,
some of our former employees who were exposed to certain of our trade secrets and other proprietary knowledge in the course of their
employment may seek employment with, and become employed by, our competitors. We cannot assure you that consultants, employees, and
other third parties with whom we have entered into confidentiality agreements will not breach the terms of such agreements by improperly
using or disclosing our trade secrets or other proprietary knowledge, that we will have adequate remedies for any such breach, or that our
trade secrets will not become known to or be independently developed by our competitors. The loss of trade secret protection for technologies
or know-how relating to our product portfolio and products under development could adversely affect our business and our prospects.

Our business position also depends in part on our ability to maintain and defend our existing patents and obtain, maintain, and defend
additional patents and other intellectual property rights. We intend to seek additional patents, but our pending and future patent applications
may not be approved, may not give us a competitive advantage, could be challenged by others, or if issued, could be deemed invalid or
unenforceable. Patent prosecution, related proceedings, and litigation in the U.S. and in other countries may be expensive, time consuming
and ultimately unsuccessful. In addition, patents issued by foreign countries may afford less protection than is available under U.S. patent law
and may not adequately protect our proprietary information. Our competitors may independently develop proprietary technologies and
processes that are the same as or substantially equivalent to ours or design around our patents. The expiration of patents on which we rely for
protection of key products could diminish our competitive advantage and adversely affect our business and our prospects.

Companies in the medical device industry typically obtain patents and frequently engage in substantial intellectual property litigation.
Our products and technologies could infringe on the rights of others. If a third party successfully asserts a claim for infringement against us,
we may be liable for substantial damages, be unable to sell products using that technology, or have to seek a license or redesign the related
product. These alternatives may be uneconomical or impossible. Intellectual property litigation could be costly, result in product development
delays and divert the efforts and attention of management from our business.

Product liability claims could damage our reputation and adversely affect our financial results.

The clinical use of medical products, even after regulatory approval, poses an inherent risk of product liability claims. We maintain
limited product liability insurance coverage, subject to deductibles and exclusions. We cannot be sure that product liability insurance will be
available in the future or will be available on acceptable terms or at reasonable costs, or that such insurance will provide us with adequate
coverage against potential liabilities. Claims against us, regardless of their merit or potential outcome, may also hurt our ability to obtain
physician endorsement of our products or expand our business. As we continue to introduce more products, we face an increased risk that a
product liability claim will be brought against us.

Many of our products are designed for patients who suffer from late-stage or end-stage heart failure, and many of these patients do not

survive, even when supported by our products. There are many factors beyond our control that could result in patient death, including the
condition of the patient prior to use of the product, the skill and reliability of physicians and hospital personnel using and monitoring the
product, and product maintenance by customers. However, the failure of the products we distribute for clinical testing or sale could give rise
to product liability claims and negative publicity.

The risk of product liability claims will increase as we sell more products that are intended to support a patient until the end of life. The

finite life of our products, as well as complications associated with their use, could give rise to product liability claims whether or not the
products have extended or improved the quality of a patient’s life. For example, the AbioCor will have a finite life and could cause unintended
complications to other organs and may not be able to support all patients successfully. Its malfunction could give rise to product liability
claims whether or not it has extended or improved the quality of the patient’s life. If we have to pay product liability claims in excess of our
insurance coverage, our financial condition will be adversely affected.

Off-label use of our products may result in injuries that lead to product liability suits, which could be costly to our business.

The use of our products outside the indications cleared for use, or “off-label use,” may increase the risk of injury to patients. Clinicians

may use our products for off-label uses, as the FDA does not restrict or regulate a clinician’s choice of treatment within the practice of
medicine. Off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and
could divert our management’s attention and result in substantial damage awards against us.

If the FDA or another regulatory agency determines that we have promoted off-label use of our products, we may be subject to various
penalties, including civil or criminal penalties.

The FDA and other regulatory agencies actively enforce regulations prohibiting promotion of off-label uses and the promotion of

products for which marketing clearance has not been obtained. If the FDA or another regulatory agency determines that our promotional
materials or training constitutes promotion of an unapproved use, it could request that we modify our training or promotional materials or
subject us to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure, civil fine and criminal penalties.
Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA or another regulatory
agency could disagree and conclude that we have engaged in off-label promotion.

Quality problems can result in substantial costs and write-downs.

Government regulations require us to track materials used in the manufacture of our products, so that any problem identified in one
product can be traced to other products that may have the same problem. An identified quality problem may require reworking or scrapping
related inventory and recalling previous shipments. Because a malfunction in our products can be life-threatening, we may be required to
recall and replace, free of charge, products already in the marketplace. Any quality problem could cause us to incur significant expenses, lead
to significant write-offs, injure our reputation and harm our business and financial results.

If we fail to compete successfully against our existing or potential competitors, our product sales or operating results may be harmed.

Competition from other companies offering circulatory care products is intense and subject to rapid technological change and evolving
industry requirements and standards. We compete with companies that have substantially greater or broader financial, product development,
sales and marketing resources and experience than we do. These competitors may develop superior products or products of similar quality at
the same or lower prices. Moreover, improvements in current or new technologies may make them technically equivalent or superior to our
products in addition to providing cost or other advantages.

Our customers frequently have limited budgets. As a result, our products compete against a broad range of medical devices and other

Our AB5000 and BVS 5000 systems compete with a temporary cardiac assist device from Thoratec Corporation, which is approved as a

recovery device for post-cardiotomy support. In addition, the AB5000 and BVS 5000, as well as our Impella products, compete with other
blood pumps that are used in medical centers for a variety of applications, such as intra-aortic balloon pumps, including those offered by
Datascope and Arrow International, and centrifugal pumps. Levitronix is conducting clinical trials in the U.S. for a device that may compete
with our current heart assist products in some applications. Levitronix has licensed this product to Thoratec for distribution in the U.S. The
FDA recently approved a product designed by CardiacAssist, Inc. that may compete with our Impella products. Approval by the FDA of
products that compete directly with our products would increase competitive pricing and other pressures.

Advances in medical technology, biotechnology and pharmaceuticals may reduce the size of the potential markets for our products or
render those products obsolete. We are aware of other heart replacement device research efforts in the U.S., Canada, Europe and Japan. In
October 2004, the FDA approved Syncardia Systems’ CardioWest Total Artificial Heart for use as a bridge to transplantation in cardiac
transplant-eligible candidates at risk of imminent death from non-reversible biventricular failure. In addition, there are a number of
companies; including Thoratec Corporation, Jarvik Heart, World Heart Corporation, MicroMed Technology, Ventracor, EvaHeart, Terumo
Heart and several early-stage companies, that are developing permanent heart assist products, including implantable left ventricular assist
devices and miniaturized rotary ventricular assist devices.

If we acquire other companies or businesses, we will be subject to risks that could hurt our business.

We may pursue acquisitions to obtain complementary businesses, products or technologies. Any such acquisition may not produce the

revenues, earnings or business synergies that we anticipate and an acquired business, product or technology might not perform as we expect.
Our management could spend a significant amount of time, effort and money in identifying, pursuing and completing the acquisition. If we
complete an acquisition, we may encounter significant difficulties and incur substantial expenses in integrating the operations and personnel
of the acquired company into our operations while striving to preserve the goodwill of the acquired company. In particular, we may lose the
services of key employees of the acquired company and we may make changes in management that impair the acquired company’s
relationships with employees and customers.

Any of these outcomes could prevent us from realizing the anticipated benefits of an acquisition. To pay for an acquisition, we might use
stock or cash. Alternatively, we might borrow money from a bank or other lender. If we use stock, our stockholders would experience dilution
of their ownership interests. If we use cash or debt financing, our financial liquidity would be reduced. We may be required to capitalize a
significant amount of intangibles, including goodwill, which may lead to significant amortization or write-off charges. These amortization
charges and write-offs could decrease our future earnings or increase our future losses.

Our investment in World Heart Corporation is subject to risk.

In fiscal 2008, we invested $5.0 million in WorldHeart in the form of a convertible note and warrant. On July 31, 2008, our investment in

WorldHeart was converted to 86,000,000 shares of WorldHeart’s common stock, which represented approximately 21.6% of WorldHeart’s
outstanding shares. Following a reverse stock split that WorldHeart completed in October 2008, we held 2,866,666 shares of WorldHeart. In
December 2008, we sold 135,000 shares of WorldHeart for net proceeds of $0.3 million. As of March 31, 2009, we now hold 2,731,666
common shares of WorldHeart, or approximately 20.6% of WorldHeart’s issued and outstanding stock. Our investment in WorldHeart is
subject to a number of risks and uncertainties. WorldHeart currently is not profitable and has limited financial resources and we may lose
some or all of our investment. In addition, applicable securities law restrictions and low trading volumes may result in an inability to liquidate
our WorldHeart investment.

Fluctuations in foreign currency exchange rates could result in declines in our reported sales and earnings.

Because some of our international sales are denominated in local currencies and not in U.S. dollars, our reported sales and earnings are

subject to fluctuations in foreign currency exchange rates, primarily the Euro. The functional currency of our subsidiaries in Germany,
Ireland, and France is the Euro. At present, we do not hedge our exposure to foreign currency fluctuations. As a result, sales and expenses
occurring in the future that are denominated in foreign currencies may be translated into U.S. dollars at less favorable rates, resulting in
reduced revenues and earnings.

Risks Related to Our Common Stock

The market price of our common stock is volatile.

The market price of our common stock has fluctuated widely and may continue to do so. For example, from March 31, 2008 to
March 31, 2009 the price of our stock ranged from a high of $20.07 per share to a low of $4.67 per share. Many factors could cause the
market price of our common stock to rise and fall. Some of these factors are:

•

variations in our quarterly results of operations;

the status of regulatory approvals for our products;

the introduction of new products by us or our competitors;

acquisitions or strategic alliances involving us or our competitors;

changes in health care policy or third-party reimbursement practices;

•

changes in estimates of our performance or recommendations by securities analysts;

the hiring or departure of key personnel;

future sales of shares of common stock in the public market; and

market conditions in the industry and the economy as a whole.

In addition, the stock market in general and the market for shares of medical device companies in particular have experienced extreme
price and volume fluctuations in recent years. These fluctuations are often unrelated to the operating performance of particular companies.
These broad market fluctuations may adversely affect the market price of our common stock. When the market price of a company’s stock
drops significantly, stockholders often institute securities class action litigation against that company. Any litigation against us could cause us
to incur substantial costs, divert the time and attention of our management and other resources, or otherwise harm our business.

The sale of additional shares of our common stock, or the exercise of outstanding options to purchase our common stock, would dilute our
stockholders’ ownership interest.

We have issued a substantial number of options to acquire our common stock and we expect to continue to issue options to our
employees and others. If all outstanding stock options were exercised, our stockholders would suffer dilution of their ownership interest. In
addition, we have issued from time to time, additional shares of our common stock in connection with acquisitions, public offerings, and other
activities. Future issuances of our common stock would also result in a dilution of our stockholders’ ownership interest.

The sale of material amounts of common stock could encourage short sales by third parties and depress the price of our common stock. As
a result, our stockholders may lose all or part of their investment.

The downward pressure on our stock price caused by the sale of a significant number of shares of our common stock or the perception

that such sales could occur by any of our significant stockholders could cause our stock price to decline, thus allowing short sellers of our
stock an opportunity to take advantage of any decrease in the value of our stock. The presence of short sellers in our common stock may
further depress the price of our common stock.

Our certificate of incorporation and Delaware law could make it more difficult for a third party to acquire us and may prevent our
stockholders from realizing a premium on our stock.

Provisions of our certificate of incorporation and Delaware General Corporation Law may make it more difficult for a third party to

acquire us, even if doing so would allow our stockholders to receive a premium over the prevailing market price of our stock. Those
provisions of our certificate of incorporation and Delaware law are intended to encourage potential acquirers to negotiate with us and allow
our Board of Directors the opportunity to consider alternative proposals in the interest of maximizing stockholder value. However, such
provisions may also discourage acquisition proposals or delay or prevent a change in control which could negatively affect our stock price.

The market value of our common stock could vary significantly based on market perceptions of the status of our development efforts.

The perception of securities analysts regarding our product development efforts could significantly affect our stock price. As a result, the
market price of our common stock has and could in the future change substantially when we or our competitors make product announcements.
Many factors affecting our stock price are industry related and beyond our control.

We have not paid and do not expect to pay dividends and any return on our stockholders’ investment will likely be limited to the value of
our common stock.

We have never paid dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable
future. The payment of dividends on our common stock will depend on our earnings, financial condition and other business and economic
factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less
valuable because a return on our stockholders’ investment will only occur if our stock price appreciates.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our headquarters are located at 22 Cherry Hill Drive in Danvers, Massachusetts and consists of approximately 80,000 square feet of

space under an operating lease which would have expired in 2010. In June 2008, we amended this lease, which extended the lease from
February 28, 2010 to February 28, 2016. The lease continues to be accounted for as an operating lease. The amendment changed the rent
payments under the lease from $64,350 per month to the following schedule:

•

The base rent for July 2008 through October 2008 was $0 per month;

The base rent for November 2008 through June 2010 is $40,000 per month;

The base rent for July 2010 through February 2014 will be $64,350 per month; and

The base rent for March 2014 through February 2016 will be $66,000 per month.

In addition, we have 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 amendment. This facility encompasses most of our U.S. operations, including research and
development, manufacturing, sales and marketing and general and administrative departments.

Our European headquarters are located in Aachen, Germany in a leased facility of approximately 33,000 square feet. Our lease expires in

December 2012. The monthly rent due under the lease agreement is 51,646€ (Euro) (approximately U.S. $69,000) per month or 619,752€
(Euro) (approximately U.S. $828,000) per year. The building houses most of the research and development and manufacturing operations for
our Impella product line as well as the sales, marketing and general and administrative functions for most of our product lines sold in Europe
and the Middle East.

In light of the 510 (k) clearance of our Impella 2.5 device and in advance of potential PMA approvals for our Impella 5.0 and LD
devices, we evaluated opportunities outside the U.S. for a high-throughput manufacturing facility. In July 2008, we entered into a lease
agreement providing for the lease of a 33,000 square foot manufacturing facility in Athlone, Ireland. The lease agreement is for a term of 25
years and one week, commencing on April 18, 2008. The monthly rent due under the lease agreement and payable monthly is 22,455.33€
(Euro) (approximately U.S. $30,000) per month or 269,464€ (Euro) (approximately U.S. $360,000) per year for the first five years of the
lease, through April 17, 2013. On April 18, 2013 and each fifth anniversary thereafter, the rental rate will be set to a current market rate, as
determined by the procedures set forth in the lease agreement. We have the right to terminate the lease after five years, subject to the payment
of a termination fee equal to 18 months rent, and the right to terminate the lease after 10 years, subject to the payment of a termination fee
equal to six months of the then current rent.

We lease a small office in France, which focuses on the sales and marketing of our product lines sold in France and we lease a small

office in Leeds, United Kingdom for our sales and marketing efforts in the United Kingdom.

ITEM 3. 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 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
consolidated financial statements. At March 31, 2009 there were no pending legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended March 31, 2009.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER

PURCHASES OF EQUITY SECURITIES

Market Price

Our common stock is traded on the Nasdaq Global Market under the symbol “ABMD.” The following table sets forth the range of high

and low sales prices per share of common stock, as reported by the Nasdaq Global Market for our two most recent fiscal years:

Fiscal Year Ended March 31, 2008

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Fiscal Year Ended March 31, 2009

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Number of Stockholders

High

Low

$13.96

$10.50

14.31

15.96

15.75

9.95

11.68

12.27

High

Low

$20.00

$12.87

20.07

18.03

16.74

16.29

10.54

4.67

As of May 29, 2009, we had approximately 655 holders of record of our common stock and there were approximately 9,585 beneficial

holders of our common stock. Many beneficial holders hold their stock through depositories, banks and brokers included as a single holder in
the single “street” name of each respective depository, bank, or broker.

Dividends

We have never declared or paid any cash dividends on our common stock and do not anticipate paying any cash dividends on our
common stock in the foreseeable future. We anticipate that we will retain all of our future earnings, if any, to support operations and to
finance the growth and development of our business. Our payment of any future dividends will be at the discretion of our board of directors
and will depend upon our financial condition, operating results, cash needs and growth plans.

Performance Graph

The following graph compares the yearly change in the cumulative total stockholder return for our last five full fiscal years, based upon

the market price of our common stock, with the cumulative total return on a Nasdaq Composite Index (U.S. Companies) and a peer group, the
Nasdaq Medical Equipment-SIC Code 3840-3849 Index, which is comprised of medical equipment companies, for that period. The
performance graph assumes the investment of $100 on March 31, 2004 in our Common Stock, the Nasdaq Composite Index (U.S.
Companies) and the peer group index, and the reinvestment of any and all dividends.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among ABIOMED, Inc., The NASDAQ Composite Index
And The NASDAQ Medical Equipment SIC Code 3840-3849 Index

G
E

$180

$160

$140

$120

$100

$80

$60

$40

$20

3/31/04

3/31/05

3/31/06

3/31/07

3/31/08

3/31/09

ABIOMED, Inc.

NASDAQ Composite

NASDAQ Medical Equipment SIC Code 3840-3849

* $100 invested on 3/31/04 in stock or index-including reinvestment of dividends.
Fiscal year ending March 31.

ABIOMED, Inc.

Nasdaq Composite Index

Nasdaq Medical Equipment SIC Code 3840-3849

Cumulative Total Return ($)

3/31/2004

3/31/2005

3/31/2006

3/31/2007

3/31/2008

3/31/2009

100

129.18

100.25

105.05

157.51

117.33

154.79

166.79

121.43

147.53

160.44

114.29

149.56

59.83

76.65

79.57

This graph is not “soliciting material” under Regulation 14A or 14C of the rules promulgated under the Securities Exchange Act of
1934, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference in any of our
filings under the Securities Act of 1933, as amended, or the Exchange Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.

Transfer Agent

American Stock Transfer & Trust Company, 59 Maiden Lane, New York, NY 10038, is our stock Transfer Agent.

ITEM 6. SELECTED FINANCIAL DATA

SELECTED CONSOLIDATED FINANCIAL DATA

(In thousands, except per share data)

Statement of Operations Data:

Revenue:

Products

Funded research and development

Costs and expenses:

Cost of product revenue excluding amortization of intangibles

Research and development
Selling, general and administrative

Arbitration decision
Expensed in-process research and development

Amortization of intangible assets

Loss from operations

Other (expense) income:

Investment (expense) income, net
Gain on sale of WorldHeart stock

Change in fair value of WorldHeart note receivable and warrant
Other (expense) income, net

Loss before provision for income taxes
Provision for income taxes

Net loss

Basic and diluted net loss per share
Weighted average shares outstanding

Balance Sheet Data:
Cash, cash equivalents, and short and long term marketable securities
Working capital
Total assets
Stockholder’s equity

Fiscal Years Ended March 31,

2009

2008

2007

2006

2005

$ 72,512

$ 58,322

$ 50,408

$ 43,322

$37,945

698

619

241

348

271

73,210

58,941

50,649

43,670

38,216

20,437

25,328
55,357

—
—

1,606

15,065

24,917
52,658

1,206
—

1,582

12,012

22,292
42,448

—
800

1,608

11,685

16,739
30,923

—
13,306

1,308

9,366

13,350
18,566

—
—

187

102,728

95,428

79,160

73,961

41,469

(29,518)

(36,487)

(28,511)

(30,291)

(3,253)

(1,404)
313

—
(236)

1,625
—

(5,000)
(541)

1,045
—

—
60

1,194
—

—
4

(1,327)

(3,916)

1,105

1,198

801
—

—
110

911

(30,845)
752

(40,403)
527

(27,406)
475

(29,093)
356

(2,342)
—

$ (31,597) $ (40,930) $ (27,881) $(29,449) $ (2,342)

(0.91) $

(1.26) $

(1.03) $

34,882

32,465

27,124

(1.15) $ (0.11)
21,845

25,649

$ 60,900
70,910
135,958
115,983

$ 38,299
52,027
118,031
93,594

$ 75,125
83,485
136,183
122,095

$ 30,835
37,704
78,537
69,488

$43,617
50,342
61,061
56,179

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All statements, trend analysis and other information contained in the following discussion relative to markets for our products and trends

in sales, gross profit and anticipated expense levels, as well as other statements, including words such as “may,” “anticipate,” “believe,”
“plan,” “estimate,” “expect,” and “intend” and other similar expressions constitute forward-looking statements. These forward-looking
statements are subject to business and economic risks and uncertainties and our actual results of operations may differ materially from those
contained in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those
discussed under Item 1A Risk Factors as well as other risks and uncertainties referenced in this report.

Overview

We are a leading provider of medical devices in circulatory support and we offer a continuum of care in heart recovery to acute heart

failure patients. Our strategy is focused on establishing heart recovery as the goal for all acute cardiac attacks. Our products are designed to
enable the heart to rest, heal and recover by improving blood flow and/or performing the pumping function of the heart. We believe we are the
only company with commercially available cardiac assist devices approved for heart recovery from all causes by the U.S. Food and Drug
Administration, or FDA and our products have been used to treat thousands of patients to date. Our products can be used in a broad range of
clinical settings, including by heart surgeons for patients in profound shock and by interventional cardiologists for patients who are in
pre-shock or in need of prophylactic support in the cardiac catheterization lab, or cath lab. Our circulatory care products are designed to
provide hemodynamic support for acute patients from the cath lab to the surgery suite, with a goal of heart recovery and sending the patient
home with his or her native heart. We believe heart recovery is the optimal clinical outcome for patients because it provides a better quality of
life than alternatives. In addition, we believe heart recovery is the most cost-effective path for the healthcare system. Since 2004, our
executive team has focused our efforts on expanding our product portfolio. We have significantly increased our product portfolio, which now
includes several circulatory care products that either have been approved or cleared by the FDA in the U.S., have received CE mark approval
in Europe, or have received registration or regulatory approval in numerous other countries. We also have additional new circulatory care
products in development.

Our strategic focus and the driver of the most recent revenue growth in our business is the market penetration of our Impella 2.5 product,
which received 510(k) clearance in June 2008. In addition to the 510(k) clearance, we are also conducting clinical trials of our Impella 2.5 for
additional indications of use, with the goal of establishing Impella as the standard of care in the cath lab. We have found that the 510(k)
clearance of our Impella 2.5 has significantly slowed our progress in completing the clinical trials, since our customers are now able to use the
Impella 2.5 commercially outside of the clinical trials. We recently received 510(k) clearance in April 2009 for our Impella 5.0 and Impella
LD devices, which are larger and provide more blood flow than the Impella 2.5. We are also currently in clinical trials with our Impella 5.0
and LD devices. Similar to our experience with the Impella 2.5, we expect that the 510(k) clearance of the Impella 5.0 and LD will slow down
our efforts to complete clinical trials with these devices.

In order for our manufacturing to meet the expected demand for our Impella 2.5 product, we have been increasing our inventory levels
and implementing process improvements at our manufacturing facilities in Aachen, Germany, to increase the output that we can produce at
the facility. We also recently signed a lease for a facility in Athlone, Ireland, where we plan to establish a high-throughput manufacturing
facility for the production of our Impella products in order to meet anticipated sales volumes of Impella 2.5. We expect our Ireland facility to
produce its first product for human use by the end of fiscal year 2010.

Revenues from our other heart recovery products have decreased recently as we have strategically shifted our sales and marketing efforts

towards our Impella products. We expect that sales from these other products will have limited or no growth in the short term as we dedicate
the majority of our focus and resources on our Impella products. We have from time to time engaged in console placement programs related to
our iPulse consoles, in order to encourage utilization of our BVS and AB5000 disposables. We have also developed a portable driver for our
AB5000 product which received FDA approval under a PMA supplement in March 2009. This clearance allows for immediate commercial
shipment of the device to U.S. hospitals for in hospital and transport use. The out of hospital use is being studied in a clinical trial to allow
patients to go home while waiting for recovery. We believe that the added mobility afforded by the portable driver will help our overall
AB5000 revenues. Our BVS product was launched 17 years ago and revenue from this product has been declining as AB5000, our next-
generation product for heart recovery, is designed to provide a longer duration of support than the BVS 5000 and facilitates patient mobility in
the hospital. We expect revenue from BVS to continue to decline as our customers transition more to AB5000 disposables and also as our new
Impella products, especially our recently cleared Impella 5.0 and LD devices, are introduced in the U.S. We expect limited or no growth in
our revenues from our AB5000 business during fiscal 2010 as we continue to focus on our Impella products. We do not expect that revenues
from sales of our replacement heart product, the AbioCor, will be a material portion of our total revenues for the foreseeable future as our
primary strategic focus is centered around heart recovery for acute heart failure patients. We did not recognize any AbioCor revenue during
the fiscal 2009.

We have incurred net losses since our inception, including net losses of $31.6 million and $40.9 million in fiscal years 2009 and 2008,
respectively. We expect to incur additional net losses in the future as we continue to invest in research and development expenses related to
our products, increase our inventory levels, and ramp up our manufacturing facility in Ireland.

Our financial condition has been bolstered by our public offering in August 2008, which yielded us approximately $42.0 million in net
proceeds after deducting offering expenses. We expect that our existing cash resources, together with our revenues, will be sufficient to fund
our operations for at least the next 12 months.

Critical Accounting Policies and Estimates

Significant Estimates

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements. The

preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an
ongoing basis, we evaluate our estimates, including those related to revenue recognition, inventories, impairment of intangible assets and
goodwill, financial instruments, accrued expenses, income taxes including the valuation allowance for deferred tax assets, stock-based
compensation, valuation of long-lived assets and investments, contingencies and litigation. We base our estimates on historical experience and
on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying
values of assets and liabilities. Actual results could differ from those estimated.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our

consolidated financial statements.

Revenue Recognition

We recognize revenue when evidence of an arrangement exists, title has passed (generally upon shipment) or services have been
rendered, the selling price is fixed or determinable and collectibility is reasonably assured in accordance with SEC Staff Accounting Bulletin
No. 104 (“SAB 104”). We also follow the guidance of Emerging Issues Task Force (“EITF”) No. 00-21, Revenue Arrangements with Multiple
Deliverables when transactions include multiple elements. Revenue from product sales to new customers is deferred until training on the use
of the products has occurred. All costs related to product shipment are recognized at time of shipment. We do not provide for rights of return
to customers on product sales.

Maintenance and service support contract revenues are recognized ratably over the term of the service contracts based upon the elapsed
term of the service contract. In limited instances, we rent console medical devices on a month-to-month basis or for a longer specified period
of time to customers for which revenue is recognized as earned.

Government-sponsored research and development contracts and grants generally provide for payment on a cost-plus-fixed-fee basis.
Revenues from these contracts and grants are recognized as work is performed. Under contracts in which we elect to spend significantly more
on the development project during the term of the contract than the total contract amount, we prospectively recognize revenue on such
contracts ratably over the term of the contract as related research and development costs are incurred.

Goodwill and Intangible Assets

We evaluate goodwill for impairment at least annually using forecasts of discounted future cash flows. Estimates of future cash flows

require assumptions related to revenue and operating income growth, asset-related expenditures, working capital levels and other factors.
Different assumptions from those made in our analysis could materially affect projected cash flows and our evaluation of goodwill for
impairment. Should the fair value of goodwill decline because of reduced operating performance, market declines, delays in regulatory
approval, other indicators of impairment, or as a result of changes in the discount rate, charges for impairment of goodwill may be necessary.
We performed our annual impairment review for fiscal 2009 as of October 31, 2008 and determined that goodwill was not impaired. In light
of a decrease in our market capitalization since October 31, 2008 and the difficult worldwide economic conditions in recent months, we
updated our impairment review as of March 31, 2009 and determined that our goodwill was not impaired. The carrying amount of goodwill at
March 31, 2009 was $31.3 million.

We estimate the fair value of acquisition-related intangible assets principally based on projections of cash flows that will arise from
identifiable intangible assets of acquired businesses. The projected cash flows are discounted to determine the present value of the assets at the
dates of acquisition. We review intangible assets for impairment whenever events or changes in business circumstances indicate that the
carrying amount of assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Factors considered
important which could trigger an impairment review include significant changes relative to: (i) projected future operating results; (ii) the use
of the assets or the strategy for the overall business; (iii) business collaborations; and (iv) industry, business, or economic trends and
developments. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If it is
determined that the carrying value of intangible assets may not be recoverable, the asset is written down to its estimated fair value on a
discounted cash flow basis. The net book value of intangible assets at March 31, 2009 was $4.4 million.

Allowance for Doubtful Accounts

We regularly monitor collections and payments from our customers and maintain a provision for estimated losses based upon our
historical experience and any specific customer collection issues that we have identified. Although such credit losses have historically been
within our expectations and the provisions established, we cannot guarantee that we will continue to experience the same credit loss rates that
we have in the past. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make
payments, additional allowances would be required.

Warranties

Our products are subject to rigorous regulation and quality standards. Although we have established extensive product quality programs

and processes, including monitoring and evaluating the quality of our component suppliers, we record a warranty obligation related to
anticipated product failure rates and product recalls. Our consoles are covered by a one-year limited manufacturer’s warranty. We estimate
and record a warranty obligation in cost of revenue at the time of shipment and we record any additional amounts when we determine that
such costs are probable and we can reasonably estimate them. Historically, our warranty provision has not been substantial; however, our
operating results could be adversely affected if the actual cost of any product failures, including product recalls, exceeds our estimated
warranty provision.

Inventories

We value our inventory of products held for sale at the lower of cost or current estimated market value. We regularly review inventory

quantities on hand and write down to its net realizable value any inventory believed to be impaired. If actual demand or market conditions are
less favorable than projected demand, additional inventory write-downs may be required that could adversely impact financial results for the
period in which the additional excess or obsolete inventory is identified. We recorded write-downs of inventory in the amount of $1.4 million,
$1.0 million, and $0.2 million for fiscal 2009, 2008, and 2007, respectively.

Accrued Expenses

As part of the process of preparing our financial statements, we are required to estimate accrued expenses. This process involves
identifying services that third parties have performed on our behalf and estimating the level of service performed and the associated cost
incurred on these services as of each balance sheet date in our financial statements. Examples of estimated accrued expenses include contract
service fees, such as amounts due to clinical research organizations, professional service fees, such as fees of attorneys and accountants, fees
of investigators in conjunction with clinical trials and third party expenses relating to marketing efforts associated with commercialization of
our product and product candidates. In the event that we do not identify certain costs that have been incurred or we under or over-estimate the
level of services or the costs of such services, our reported expenses for a reporting period could be overstated or understated. The date on
which certain services commence, the level of services performed on or before a given date, and the cost of services is often subject to our
judgment. We make these judgments and estimates based upon known facts and circumstances.

Stock-Based Compensation

We record stock-based compensation in our statements of operations based on the fair value method in accordance with Statements of

Financial Accounting Standards (“SFAS”) No. 123(R) Share-Based Payment. This expense is determined after consideration of several
significant judgments and estimates. The fair value of each stock option we granted is estimated using the Black-Scholes option pricing
model. Use of a valuation model requires us to make certain assumptions with respect to selected model inputs. 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 historical volatility of our stock. The calculation of the fair value of the options is net of estimated
forfeitures. The expected term of options represents the period of time that options granted are expected to be outstanding. We estimated the
average expected life based on historical experience of our option exercises. Forfeitures are estimated based on an analysis of actual option
forfeitures, adjusted to the extent historical forfeitures may not be indicative of forfeitures in the future. In addition, an expected dividend
yield of zero is used in the option valuation model because we do not pay dividends and do not expect to pay any cash dividends in the
foreseeable future.

Income Taxes

As part of the process of preparing our consolidated financial statements we are required to estimate our income taxes in each of the
jurisdictions in which we operate. This process involves us estimating our actual current tax exposure together with assessing temporary
differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and
liabilities. At March 31, 2009, we had federal and state net operating loss carryforwards, or NOLs, of approximately $145.1 million and $97.1

million, respectively, which begin to expire in fiscal 2010. Additionally, at March 31, 2009, we had federal and state research and
development credit carryforwards of approximately $8.1 million and $4.2 million, respectively, which begin to expire in fiscal 2010. We
acquired Impella, a German-based company, in May 2005. The utilization of pre-acquisition NOLs of Impella in future periods is also subject
to certain statutory approvals and business requirements.

Due to uncertainties surrounding our ability to generate future taxable income to realize these assets, a valuation allowance of $109.0
million at March 31, 2009 has been established to offset our net deferred tax assets and liabilities. In the event that we determine in the future
that we will be able to realize all or a portion of our net deferred tax benefit, an adjustment to deferred tax valuation allowance would increase
net income in the period such a determination was made. Additionally, the future utilization of our NOL and research and development credit
carry forwards to offset future taxable income may be subject to a substantial annual limitation under Section 382 of the Internal Revenue
Code due to ownership changes that have occurred previously or that could occur in the future. Ownership changes, as defined in Section 382
of the Internal Revenue Code, can limit the amount of NOL carry forwards and research and development credit carry forwards that a
company can use each year to offset future taxable income and taxes payable. We believe that all of our federal and state NOL’s will be
available for carryforward to future tax periods, subject to the statutory maximum carryforward limitation of any annual NOL. Any future
potential limitation to all or a portion of the NOL or research and development credit carry forwards, before they can be utilized, would
reduce our gross deferred tax assets. We will monitor subsequent ownership changes, which could impose limitations in the future.

Fair Value Measurements

Effective April 1, 2008, we adopted the provisions under SFAS No. 157, Fair Value Measurements, as required for the valuation of our

financial assets and liabilities. However, the Financial Accounting Standards Board, or FASB, deferred the effective date of SFAS 157 for one
year as it relates to fair value measurement requirements for nonfinancial assets and nonfinancial liabilities that are not recognized or
disclosed at fair value on a recurring basis. SFAS No. 157 establishes a three-level hierarchy which prioritizes the inputs used in measuring
fair value. In general, fair value determined by Level 1 inputs utilize quoted prices in active markets for identical assets or liabilities. Fair
values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values
determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market
activity for the asset or liability. The value of our Level 1 instruments was $52.1 million and the value of our Level 3 investments was $7.0
million as of March 31, 2009.

Financial Instruments

We entered into a convertible note purchase agreement with World Heart Corporation (“WorldHeart”) in December 2007, a developer of

implantable mechanical circulatory support systems for chronic heart failure patients. Under the agreement, we loaned $5.0 million to
WorldHeart, with the note and accrued interest, at 8% per annum, convertible at our option into common stock of WorldHeart. We advanced
$1.0 million of the loan in December 2007 with the remaining $4.0 million advanced in January 2008. The conversion feature within the note
was an embedded derivative instrument under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and accordingly,
was separately valued within the carrying value of the note receivable. We also received a warrant to purchase up to 3,400,000 shares of
WorldHeart common stock.

The grant date fair values of the assets associated with the note receivable and the warrant, in excess of cash paid were deemed to be
deferred income, as analogized to SFAS No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring
Loans and Initial Direct Costs of Leases. Similar to other loan fees, the deferred income related to grant date fair value of the note receivable
and the warrant would be recognized over the life of the note receivable, if deemed to be realizable as a yield adjustment.

We initially recorded the derivative financial instruments on our consolidated balance sheet at fair value. Changes in the fair value of
these derivative financial instruments were recorded as “Change in fair value of WorldHeart note receivable and warrant” in the consolidated
statements of operations. The measurement of fair value was based on valuation methodologies considered appropriate by our management.
The estimated fair value of the embedded derivative and warrant was determined using the Black-Scholes method. Because of inherent
uncertainty of valuations of derivative instruments, estimated fair values may differ from the value that would have been used had a ready
market for the investment existed and these differences could have a material impact in the consolidated statements of operations.

In May 2008, WorldHeart filed a Form 8-K disclosing that it had limited cash available to continue operations and that if it was unable to

secure additional funding, it would be forced to take extraordinary business measures which could include filing for bankruptcy, ceasing
operations and liquidating assets. Due to these events, we recorded an impairment charge of $5.0 million during fiscal 2008 relating to our
note receivable to WorldHeart and our associated derivative instruments (embedded conversion feature and warrant).

In July 2008, WorldHeart completed the transactions contemplated by the recapitalization agreement dated June 20, 2008, as amended on

July 31, 2008, we entered into with WorldHeart and the other parties named therein. As a result of the transaction, we received 86 million

common shares of WorldHeart, which represented approximately 21.6% of WorldHeart’s issued and outstanding common shares following
the transaction. The shares were received as a result of our conversion of the full amount of principal and interest owed on the $5.0 million
convertible note issued in December 2007, our release of the security interest in all of the assets of WorldHeart that secured the note,
termination of the warrant we held to purchase 3.4 million common shares of WorldHeart, forgiveness of other amounts owed to us by
WorldHeart, the amendment of our rights with respect to the distribution of WorldHeart products, and the appointment of a director or
observer to WorldHeart’s board of directors. In October, 2008, WorldHeart completed a 30-to-1 reverse stock split, as a result of which we
held 2,866,666 common shares of WorldHeart. In December 2008, we sold 135,000 shares of WorldHeart for net proceeds of $0.3 million,
which was, as a result of our basis having been reduced to zero, recorded as a gain on the sale of WorldHeart common stock during the three
months ended December 31, 2008. As of March 31, 2009, we held 2,731,666 common shares of WorldHeart, or approximately 20.6% of
WorldHeart’s issued and outstanding shares. We are accounting for this investment using the equity method of accounting. The carrying value
of this investment was zero at March 31, 2009.

Recent Accounting Pronouncements

SFAS No. 141(R)—In December 2007, the FASB issued SFAS No. 141(R), Business Combinations. SFAS No. 141(R) applies to any

transaction or other event that meets the definition of a business combination. Where applicable, SFAS No. 141(R) establishes principles and
requirements for how the acquirer recognizes and measures identifiable assets acquired, liabilities assumed, noncontrolling interest in the
acquiree and goodwill or gain from a bargain purchase. In addition, SFAS No. 141(R) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the business combination. This statement is to be applied
prospectively for transactions occurring in fiscal years beginning after December 15, 2008. SFAS 141(R) will impact our accounting for
business combinations, if any, completed beginning April 1, 2009.

SFAS No. 160—In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an

amendment of ARB No. 51. SFAS No. 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. It also amends certain of the consolidation procedures under ARB No. 51
for consistency with the requirements of FASB Statement No. 141(R). This statement is effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008. The statement shall be applied prospectively as of the beginning of the fiscal year
in which the statement is initially adopted. We will adopt SFAS No. 160 for any acquisitions closing after March 31, 2009.

SFAS No. 161—In March 2008, the FASB issued Statement No. 161, Disclosures About Derivative Instruments and Hedging Activities.
This statement is intended to improve financial reporting about derivative instruments and hedging activities by enhanced disclosures to better
understand their effects on a company’s financial position, results of operation and cash flows. This standard is effective for interim and
annual financial statements beginning after November 15, 2008. We adopted the disclosure requirements of this pronouncement in the quarter
ending December 31, 2008.

EITF 08-06—In November 2008, the Emerging Issues Task Force, or EITF, reached a final consensus on Issue No. 08-06 (“EITF

No. 08-06”), Equity Method Investment Accounting Considerations, effective on a prospective basis for fiscal years, beginning after
December 15, 2008. We will adopt EITF 08-06 effective April 1, 2009, and do not expect it to have a material impact on our financial
position or results of operations.

Results of Operations

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

revenues (which includes revenues from products and funded research and development):

Revenues:

Product

Funded research and development

Total revenues

Costs and expenses:

Cost of product revenue excluding amortization of intangibles

Research and development

Selling, general and administrative

Arbitration decision

Expensed in-process research and development

Amortization of intangible assets

Total costs and expenses

Loss from operations

Other income and expense:

Investment (expense) income, net

Gain on sale of WorldHeart stock

Change in fair value of WorldHeart note receivable and warrant

Other expense, net

Loss before provision for income taxes

Provision for income taxes

Net loss

Fiscal Years Ended March 31, 2009 and March 31, 2008 (“fiscal 2009” and “fiscal 2008”)

Revenue

Our revenues are comprised of the following:

Impella

Other

Total product revenues

Funded research and development

Total revenues

Year Ended March 31,

2009

2008

2007

99.0%

98.9%

99.5%

1.0

1.1

0.5

100.0

27.9

34.6

75.6

—

2.2

25.6

42.3

89.3

2.0

—

2.7

23.7

44.0

83.8

—

1.6

3.2

140.3

161.9

156.3

(40.3)

(61.9)

(56.3)

—

(1.9)

0.4

—

(0.3)

(1.8)

—

2.8

—

(8.5)

(0.9)

(6.6)

—

2.1

—

0.1

2.2

(42.1)

(68.5)

(54.1)

1.0

0.9

(43.2)% (69.4)% (55.0)%

Year Ended
March 31,

2009

2008

(in $000’s)

$36,364

$12,311

36,148

46,011

72,512

58,322

698

619

$73,210

$58,941

Product revenues for fiscal 2009 increased by $14.2 million, or 24%, to $72.5 million from $58.3 million for fiscal 2008. The increase in
product revenue was primarily due to an increase in Impella revenue of 195% due to greater demand in the U.S. following 510(k) clearance of
the Impella 2.5 in June 2008, offset by a decrease in our other non-Impella revenue.

Impella revenues for fiscal 2009 increased by $24.1 million, or 195% to $36.4 million from $12.3 million for fiscal 2008. Most of our
Impella revenue was from disposable product sales of Impella 2.5, primarily as a result of sales occurring after our 510(k) clearance in June
2008. Our launch strategy of Impella 2.5 has been focused on increasing demand for disposable products by providing consoles to initial sites
at no cost. We expect these console promotions to decrease as the number of hospitals using our Impella 2.5 products increase. We have sold
the Impella 2.5 to over 200 hospitals in the U.S. and our focus for fiscal 2010 will be concentrated on working with hospitals to assist them in
adopting the Impella 2.5 on a regular basis, thus creating continued demand for the product.

Other revenues for fiscal 2009 decreased by $9.9 million or 21%, to $36.1 million from $46.0 million for fiscal 2008. The decrease in
other revenue was due to a decrease in BVS and AB disposable revenue as well as a decrease in console revenue supporting these product
lines. We expect that BVS revenue will continue to decline as the product is 17 years old. We expect that our AB5000 revenue will be
rejuvenated somewhat with the approval of the Portable Driver in the U.S. in March 2009. Also, our recent 510(k) clearance for the Impella
5.0 in April 2009 will allow us an opportunity to sell AB5000 as we refocus our efforts on the surgery market.

We expect that demand for our Impella products should increase in fiscal 2010 and will comprise a higher percentage of total sales in the

future based on 510(k) clearances of our Impella 2.5, 5.0 and LD products in the U.S. and as we enroll more patients in our PCI and AMI
pivotal studies for the Impella 2.5 clinical trial. As a result, we expect that most of our revenue growth in fiscal 2010 will come from our
Impella product line, with limited or no growth for most of our other products.

Cost of Product Revenues

Cost of product revenues for fiscal 2009 increased by $5.3 million or 35%, to $20.4 million from $15.1 million for fiscal 2008. This was

due to shipments of higher volumes of Impella 2.5 disposable products in fiscal 2009. This resulted in gross margin for fiscal 2009 of 72%
compared to 74% for fiscal 2008. The decrease in gross margin was primarily due to the effect of certain Impella, AB 5000, iPulse, and
Portable Driver console programs implemented to generate future disposable revenue. Cost of product revenues also was negatively impacted
during fiscal 2009 from materials, training and other expenses related to our capacity ramp-up of Impella. During fiscal 2009, we also wrote
off approximately $1.4 million of inventory for slow moving or obsolete products.

Research and Development Expenses

Research and development expenses for fiscal 2009 increased by $0.4 million, or 2%, to $25.3 million from $24.9 million in fiscal 2008.
The increase in research and development expenses was due to higher clinical trial activity for Impella, offset by lower program spending on
Portable Driver and AbioCor. Research and development expenses for fiscal 2009 and 2008 included $7.1 million and $2.8 million,
respectively, in clinical trial expenses primarily associated with our Impella 2.5 and 5.0 U.S. trials. The increase in product development costs
reflects our efforts to expand and enhance our product lines across a clinical spectrum of circulatory care.

We expect research and development spending to increase slightly in fiscal 2010 in order to support our efforts in enrolling patients in

our PCI and AMI pivotal studies for the Impella 2.5 clinical trial. We also will incur expenses to support improvement of our Impella product
line and continue to invest in research on new products.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for fiscal 2009 increased by $2.7 million, or 5%, to $55.4 million from $52.7 million in
fiscal 2008. The increase is due to an increase of $2.9 million in stock based compensation primarily associated with grants of restricted stock
made in May 2008 and August 2008. We have also made recent investments in marketing initiatives and in sales and clinical representatives
with commercial headcount in the U.S. up from 75 at March 31, 2008 to 97 at March 31, 2009. We are investing in our commercial
organization to support the launch of the Impella platform following 510(k) approval in the U.S.

We expect to continue to increase our expenditures on sales and marketing activities in fiscal 2010, with particular investments in clinical

personnel with cath lab expertise and we also plan to increase our marketing, service and training investments to support the efforts of the
sales and field clinical teams to drive recovery awareness for acute heart failure patients.

Amortization of Intangibles

Amortization of intangible assets was $1.6 million for each of fiscal 2009 and fiscal 2008, respectively. Amortization primarily relates to

specifically identified assets from the Impella acquisition.

Investment Expense and Income, net

Investment expense, net, was $1.4 million for fiscal 2009, representing a decrease of $3.0 million from investment income of $1.6
million for fiscal 2008. The decrease in investment income for the fiscal 2009 was due to realized and unrealized losses incurred on our
investment in the Columbia Fund and a decrease in interest rates on short-term marketable securities. Investment income and expense, net,
consists primarily of interest earned on our cash and investments and changes in the value of the Columbia Fund.

Other (Expense) Income

In December 2007, we entered into an agreement in which we made a $5.0 million investment in WorldHeart, a developer of an
implantable mechanical circulatory support system for chronic heart failure patients. We recorded an impairment charge of $5.0 million in
fiscal 2008, reducing the carrying value of the investment to zero. In July 2008, the note receivable and warrant were converted into common
stock of WorldHeart. In December 2008, we sold 135,000 shares of WorldHeart common stock, which, as a result of our basis having been
reduced to zero, resulted in a gain of $0.3 million that was recorded during fiscal 2009. The changes in other expense are mainly due to
foreign exchange effects.

Provision for Income Taxes

During fiscal 2009 and 2008, we recorded a provision for income taxes of $0.8 million and $0.5 million, respectively. The income tax

provision is primarily due to a deferred tax liability related to a difference in accounting for our goodwill, which is amortizable over 15 years
for tax purposes but not amortized for book purposes. Differences between amounts recorded as a deferred tax liability on the balance sheet
versus amounts recorded in the statements of operations are due to an unrealized gain from fluctuations in foreign currency with respect to our
European operations. The net deferred tax liability cannot be offset against our deferred tax assets since it relates to an indefinite-lived asset
and is not anticipated to reverse in the same period.

Net Loss

During fiscal 2009, we incurred a net loss of $31.6 million, or $0.91 per share compared to a net loss of $40.9 million, or $1.26 per share,

for the prior fiscal year. The decrease in the net loss in fiscal 2009 compared to fiscal 2008 is due primarily to increased Impella sales as a
result of 501(k) clearance of the Impella 2.5 in the U.S. in June 2008. We also incurred in fiscal 2008 a $5.0 million charge relating to the
change in value of the WorldHeart note receivable and warrant and a $1.2 million charge relating to the arbitration award and warrant
repurchase. We expect to continue to incur net losses for the foreseeable future as we plan to invest in expanding our global distribution to
support revenue growth and as we invest in research and development and our Impella pivotal studies to bring Impella and other new products
to market.

Fiscal Years Ended March 31, 2008 and March 31, 2007 (“fiscal 2008” and “fiscal 2007”)

Revenues

Total revenue for fiscal 2008 increased by $8.3 million, or 16%, to $58.9 million from $50.6 million for fiscal 2007. Our revenues are

primarily from sales of medical products for heart recovery.

Product revenues for fiscal 2008 increased by $7.9 million, or 16%, to $58.3 million from $50.4 million for fiscal 2007. Revenues from
disposables, service and other products (non-console revenues) comprised approximately 88% and 84% of total revenues for fiscal 2008 and
fiscal 2007, respectively. For fiscal 2008 compared to fiscal 2007, revenues from Impella disposables increased 211%, AB5000 disposables
revenue increased 10% and revenues from BVS declined approximately 16%. The Impella disposables revenue increase was due to revenue
recognized during our fiscal year 2008 from products used for the U.S. pivotal studies for the Impella 2.5 device, as well as higher sales of the
Impella 2.5 in Europe. We also recorded $1.3 million in revenue during our fourth quarter of fiscal 2008 from sales of the AbioCor Total
Replacement Heart. Comparing total revenues for fiscal 2008 to fiscal 2007, total sales of our Impella products (consoles and disposables)
increased approximately 186%, total sales of our AB 5000 products (consoles and disposables) decreased approximately 1%, and total sales of
our BVS 5000 products declined by approximately 16%.

Cost of Product Revenues

Cost of product revenues for fiscal 2008 increased by $3.1 million or 26%, to $15.1 million from $12.0 million for fiscal 2007. This was

due to an increase in cost of sales of disposable products as more of these products were sold in fiscal 2008 compared fiscal 2007 partially
offset by lower cost of sales for consoles as console revenue declined in fiscal 2008 compared to fiscal 2007. In addition, we recorded cost of
product revenues for product shipped during fiscal 2008 in connection with the Impella 2.5 U.S. pivotal studies and recently approved
AbioCor product. There were no AbioCor product sales in fiscal 2007. Cost of product revenues also was unfavorably impacted during fiscal
2008 from materials, training and other expenses related to our strategic capacity ramp-up of Impella and AB5000 console deployment
programs. During fiscal 2008, we recorded an impairment charge of $1.0 million for a write-off of inventory.

Research and Development Expenses

Research and development expenses for fiscal 2008 increased by $2.6 million, or 12%, to $24.9 million from $22.3 million in fiscal
2007. Research and development expenses for fiscal 2008 and 2007 included $2.8 and $1.2 million, respectively, in clinical trial expenses
primarily associated with our Impella 2.5 and 5.0 U.S. trials. The increase in product development costs reflected our efforts to expand and
enhance our product lines across a clinical spectrum of circulatory care, particularly related to increased clinical trial activity on Impella 2.5.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for fiscal 2008 increased by $10.3 million, or 24%, to $52.7 million from $42.4 million in
fiscal 2007. The increase was due to increased investments in our global distribution of sales and clinical representatives with headcount up
approximately 17% as compared to fiscal 2007, and is also due to our increased investments in our marketing initiatives.

Arbitration Decision

In May 2006, Richard A. Nazarian, as Selling Stockholder Representative, filed a demand for arbitration (subsequently amended) with

the American Arbitration Association. The claims arose out of our purchase of intellectual property rights relating to the Penn State Heart
program and the related warrant agreements. In November 2007, we paid the warrant holders $2.2 million of cash consideration to repurchase
the warrants and in final settlement to release us of all potential claims by the warrant holders. The excess of the $2.2 million of cash
consideration over the $1.9 million estimated fair value of the warrants at October 3, 2007 was recorded as selling, general and administrative
expense in the statements of operations during fiscal 2008. We expect that there will be no other future payments to warrant holders relating to
this arbitration decision.

Amortization of Intangibles

Amortization of intangible assets was $1.6 million for both fiscal 2008 and 2007. Amortization primarily relates to specifically identified

assets from the Impella acquisition.

Change in Fair Value of WorldHeart Note Receivable and Warrant

We marked to market the fair value of the conversion feature on the note receivable and warrant associated with the WorldHeart
transaction through March 31, 2008. In May 2008, WorldHeart filed a Form 8-K disclosing that it had limited cash available to continue
operations and that if it was unable to secure additional funding, it would be forced to take extraordinary business measures which could
include filing for bankruptcy, ceasing operations and liquidating assets. Due to these events, we recorded an impairment charge of $5.0
million during fiscal 2008 related to our note receivable from WorldHeart and its associated derivative instruments.

Investment Income, net

Investment income, net, was $1.6 million for fiscal 2008, representing an increase of $0.5 million from $1.1 million for fiscal 2007 due
primarily to a higher cash and investments balance during fiscal 2008 compared to fiscal 2007. Investment income, net, consists primarily of
interest earned on our cash and investments less $0.3 million in realized losses associated with our Columbia Fund for fiscal 2008. Also
included in investment income, net, is an unrealized loss on short-term marketable securities of $0.9 million incurred during fiscal 2008 due to
a write down to fair value of securities we held in the Columbia Fund. We deemed that the unrealized loss on the Columbia Fund was not
temporary as the market value of the Columbia Fund was approximately 97% of its carrying value.

Other (Expense) Income

The decrease in other income for fiscal 2008 was due to foreign exchange effects of $0.6 million and miscellaneous income.

Provision for Income Taxes

During fiscal 2008 and 2007, we recorded a provision for income taxes of $0.5 million in each year. The income tax provision is
primarily due to a deferred tax related to a difference in accounting for our goodwill, which is amortizable over 15 years for tax purposes but
not amortized for book purposes. Differences between amounts recorded as a deferred tax liability on the balance sheet versus amounts
recorded in the statements of operations are due to an unrealized gain from fluctuations in foreign currency with respect to our European
operations. The net deferred tax liability cannot be offset against our deferred tax assets since it relates to an indefinite-lived asset and is not
anticipated to reverse in the same period.

Net Loss

During fiscal 2008, we incurred a net loss of $40.9 million, or $1.26 per share compared to a net loss of $27.9 million, or $1.03 per share,
for the prior fiscal year. The increase in the net loss in fiscal 2008 compared to fiscal 2007 was due primarily to increased selling, general and
administrative expenses of $10.2 million related to the expansion of our global distribution and an increase of $2.6 million in research and
development expenses for costs of our Impella U.S. pivotal studies. Included in the net loss for fiscal 2008 is a $5.0 million charge relating to
the change in value of the WorldHeart note receivable and warrant, $1.2 million charge relating to the arbitration award and warrant
repurchase and $0.9 million for the unrealized loss on marketable securities.

Liquidity and Capital Resources

At March 31, 2009, our cash, cash equivalents, short-term marketable securities and long-term marketable securities totaled $60.9
million, an increase of $22.6 million compared to $38.3 million in cash, cash equivalents and short-term marketable securities at March 31,
2008. In August 2008, we completed a public offering in which we received net proceeds of $42.0 million. We believe that our revenue from
product sales together with existing resources, including the cash received from our public offering, will be sufficient to fund our operations
for at least the next twelve months.

Marketable securities at March 31, 2009 include $7.0 million of marketable securities held in the Columbia Fund. At March 31, 2009,

other short-term marketable securities consist of $52.1 million held in funds that invest solely in U.S. Treasury securities. In December 2007,
the Columbia Fund ceased accepting redemption requests from new or current investors and changed its method of valuing the securities in
the Columbia Fund to market value rather than amortized cost. As a result, we reclassified the securities in the Columbia Fund from cash
equivalents to short-term marketable securities as the Columbia Fund was no longer expected to have a maturity of less than 90 days. We
deemed that the unrealized loss on the Columbia Fund was not temporary as the market value of the Columbia Fund was approximately 83%
of its carrying value at March 31, 2009. The Columbia Fund is being liquidated with distributions to us occurring from December 2007
through May 2009. Since December 6, 2007 and through May 27, 2009, we have received disbursements of approximately $40.0 million from
the Columbia Fund with the most recent disbursement occurring on May 27, 2009 at approximately 86% of its original value. We have
recorded $3.7 million of the Columbia Fund as long-term marketable securities at March 31, 2009 because Bank of America, the sponsor of
the Columbia Fund, has indicated that it cannot predict with certainty whether or not the Columbia Fund will redeem this amount within the
next year.

The recent and unprecedented disruption in the credit markets has had a significant adverse impact on a number of financial and other

institutions. Our investments in the Columbia Fund have been frozen since December 2007 and we are subject to redemptions of these
investments based on the discretion of the Fund. When redemptions have occurred, we have realized losses on our original investment and we
expect to incur losses on future redemptions. Since December 2007, we have incurred $1.8 million in realized losses and $1.4 million in
unrealized losses on the Columbia Fund through March 31, 2009. 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. We continue to monitor our cash position
closely with recent economic events and currently only invest excess cash in short term U.S. Treasury securities.

Financial instruments, such as the Columbia Fund for which the fair value is derived primarily from broker quotes or pricing services
may fall within Level 1, 2 or 3 of the SFAS 157 fair value hierarchy, depending on the observability of the inputs used to determine fair value.
We review the pricing assumptions, inputs and methodologies in determining an instrument’s fair value as a basis for classification within the
SFAS 157 fair value hierarchy. If we believe that these estimates of fair value differ significantly from our internal expectations, we review
our findings with respect to data sources or assumptions used to determine whether the value is appropriate.

We will continue to closely monitor our liquidity and the overall health of the credit markets. However, we cannot predict with any

certainty the impact on us of any further disruption in the credit environment. Our primary liquidity needs are to fund the expansion of our
Impella manufacturing capacity in Germany and Ireland, to fund new product development, and general working capital needs. Through
March 31, 2009, we have funded our operations principally from product revenue and through the sale of equity securities, including our
August 2008 stock offering in which we received proceeds of $42.0 million. We also generate funds from product and funded research and
development revenue.

Our operating activities during the year ended March 31, 2009 used cash of $18.3 million as compared to $28.9 million during the same

period in the prior year. Our net loss for the year ended March 31, 2009 of $31.6 million was the primary cause of our cash use from
operations. Increases in accounts receivable used cash of $2.5 million during fiscal 2009 due to increased sales activity, primarily related to
Impella. In addition, the increases in inventories used cash of $1.6 million during the year ended March 31, 2009, reflecting our inventory
build-up to support anticipated increases in global demand for our products, particularly Impella 2.5. Additionally, we recorded $1.4 million
in write downs of inventory for excess and obsolescence during fiscal 2009. These decreases in cash were partially offset by non-cash
adjustments of $8.8 million related to stock-based compensation expense and $5.0 million of depreciation and amortization.

Our investing activities during the year ended March 31, 2009 used cash of $26.8 million as compared to $40.9 million during the same

period in the prior year. Cash used by investment activities for the year ended March 31, 2009 consisted primarily of $23.4 million of

purchases of short-term marketable securities, net of sales of short-term marketable securities during the quarter. Additionally, we incurred
$3.8 million related to cash expenditures for property and equipment primarily on computer software projects and manufacturing equipment
related to our expansion in Ireland.

Our financing activities during the year ended March 31, 2009 provided cash of $46.2 million as compared to $2.1 million during the
same period in the prior year. Cash provided by financing activities for the year ended March 31, 2009 was primarily comprised of $42.0
million in net proceeds related to our August 2008 public offering and $5.0 million attributable to the exercise of stock options and proceeds
from our employee stock purchase plan.

Capital expenditures for fiscal 2010 are estimated to be $2.5 to $3.0 million, which relate primarily to our planned manufacturing

capacity increases for Impella in Germany, our expansion in Ireland, and software development projects.

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, and collect cash from clients after our products are sold. Exclusive of activities involving any future acquisitions of products or
companies that complement or augment our existing line of products, we believe that current available funds and cash generated from
operations will provide sufficient liquidity to meet operating requirements for the foreseeable future. We believe that our existing cash
balances and cash flow from operations will be sufficient to meet our projected capital expenditures, working capital, and other cash
requirements at least through the next 12 months. We continue to review our long-term cash needs on a regular basis. Currently, we have no
debt outstanding.

Contractual Obligations and Commercial Commitments

The following table summarizes our contractual obligations at March 31, 2009 and the effects such obligations are expected to have on

our liquidity and cash flows in future periods.

Contractual Obligations

Operating Lease Commitments

Contractual Obligations (1)

Total Obligations

Payments Due By Fiscal Year

Less
than 1
Year

Total

(in $000’s)

1-3
Years

3-5
Years

More
than 5
Years

$10,690

$2,313

$4,267

$2,592

$1,518

9,457

4,619

4,838

—

$20,147

$6,932

$9,105

$2,592

$1,518

(1) Contractual obligations represent future cash commitments and expected liabilities under agreements with third parties for clinical trials.

We have no long-term debt, capital leases or other material commitments for open purchase orders and clinical trial agreements at

March 31, 2009 other than those shown in the table above.

In May 2005, we acquired all the shares of outstanding capital stock of Impella CardioSystems AG, a company headquartered in Aachen,

Germany. The aggregate purchase price excluding contingent payments, was approximately $45.1 million, which consisted of $42.2 million
of our common stock, $1.6 million of cash paid to certain former shareholders of Impella and $1.3 million of transaction costs, consisting
primarily of fees paid for financial advisory and legal services. At the time of the transaction, we agreed to make additional contingent
payments to Impella’s former shareholders based on additional milestone payments related to product sales and FDA approvals in the amount
of up to $16.8 million. In January 2007 upon the sale of 1,000 Impella units, we paid $5.6 million in the form of common stock. In June 2008
we received 510(k) clearance of our Impella 2.5, and we paid $5.6 million in the form of common stock. In April 2009, we received 501(k)
clearance of our Impella 5.0, triggering an obligation to make the final$5.6 million milestone payment. On May 15, 2009, we paid $1.75
million of this final milestone in cash and elected to pay the remaining amount through the issuance of approximately 664,612 shares of our
common stock. This contingent payment will result in an increase to the carrying value of goodwill.

In June 2008, we amended the lease for our facility in Danvers, Massachusetts. The amendment extended the lease from February 28,
2010 to February 28, 2016. The lease continues to be accounted for as an operating lease. The amendment changed the rent payments under
the lease from $64,350 per month to the following schedule:

•

The base rent for July 2008 through October 2008 was $0 per month;

The base rent for November 2008 through June 2010 is $40,000 per month;

The base rent for July 2010 through February 2014 will be $64,350 per month; and

The base rent for March 2014 through February 2016 will be $66,000 per month.

In addition, we have 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 amendment.

In July 2008, we entered into a lease agreement providing for the lease of a 33,000 square foot manufacturing facility in Athlone, Ireland.
The lease agreement is for a term of 25 years and one week, commencing on April 18, 2008. The monthly rent due under the lease agreement
and payable monthly is 22,455.33€ (Euro) (approximately U.S. $30,000) per month or 269,464€ (Euro) (approximately U.S. $360,000) per
year for the first five years of the lease, through April 17, 2013. On April 18, 2013 and each fifth anniversary thereafter, the rental rate will be
set to a current market rate, as determined by the procedures set forth in the lease agreement. We have the right to terminate the lease after
five years, subject to the payment of a termination fee equal to 18 months rent, and the right to terminate the lease after 10 years, subject to the
payment of a termination fee equal to six months of the then current rent.

We also lease approximately 33,000 square feet in Aachen, Germany for our European headquarters. This lease expires in December

2012. Monthly rent due under the lease agreement is 51,646€ (Euro) (approximately U.S. $69,000) per month or 619,752€ (Euro)
(approximately U.S. $828,000) per year.

We apply the disclosure provisions of FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including

Guarantees of Indebtedness of Others, and Interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation
No. 34, or FIN No. 45 to our agreements that contain guarantee or indemnification clauses. These disclosure provisions expand those required
by SFAS No. 5 by requiring that guarantors disclose certain types of guarantees, even if the likelihood of requiring the guarantor’s
performance is remote. The following is a description of arrangements in which we are a guarantor.

We enter into agreements with other companies in the ordinary course of business, typically with underwriters, contractors, clinical sites

and customers that include indemnification provisions. Under these provisions we generally indemnify and hold harmless the indemnified
party for losses suffered or incurred by the indemnified party as a result of our activities. These indemnification provisions generally survive
termination of the underlying agreement. The maximum potential amount of future payments we could be required to make under these
indemnification provisions is unlimited. We have never incurred any material costs to defend lawsuits or settle claims related to these
indemnification agreements. As a result, the estimated fair value of these agreements is minimal. Accordingly, we have no liabilities recorded
for these agreements at March 31, 2009.

Clinical study agreements—In our clinical study agreements, we have agreed to indemnify the participating institutions against losses

incurred by them for claims related to any personal injury of subjects taking part in the study to the extent they relate to use of our devices in
accordance with the clinical study agreement, the protocol for the device and our instructions. The indemnification provisions contained
within our clinical study agreements do not generally include limits on the claims. We have never incurred any material costs related to the
indemnification provisions contained in our clinical study agreements.

Product warranties—We accrue for estimated future warranty costs on our product sales at the time of shipment. All of our products are

subject to rigorous regulation and quality standards. While we engage in extensive product quality programs and processes, including
monitoring and evaluating the quality of our component suppliers, our warranty obligations are affected by product failure rates. Our
operating results could be adversely affected if the actual cost of product failures exceeds the estimated warranty provision.

Patent Indemnifications—In many sales transactions, we indemnify customers against possible claims of patent infringement caused by
our products. The indemnifications contained within sales contracts usually do not include limits on the claims. We have never incurred any
material costs to defend lawsuits or settle patent infringement claims related to sales transactions. Under the provisions of FIN No. 45,
intellectual property indemnifications require disclosure only.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Primary Market Risk Exposures

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. Our marketable securities are
subject to interest rate risk and will fall in value if market interest rates increase. If market interest rates were to increase immediately and
uniformly by 10 percent from levels at March 31, 2009, we believe the decline in fair market value of our investment portfolio would be
immaterial. Short term and long term marketable securities at March 31, 2009 consist of $7.0 million in the Columbia Fund and $52.1 million
in five funds that invest in U.S. Treasury securities and related interest. In December 2007, the Columbia Fund ceased accepting redemption
requests from new or current investors and changed its method of valuing the securities in the Columbia Fund to market value rather than
amortized cost. As a result, we reclassified the securities in the Columbia Fund from cash equivalents to short-term marketable securities as
the Columbia Fund was no longer expected to have a maturity of less than 90 days. We deemed that the unrealized loss on the Columbia Fund
was not temporary as the market value of the Columbia Fund was approximately 83% of its carrying value at December 31, 2007 and the
Company did not expect to recover the value in liquidation. The Columbia Fund is being liquidated with distributions to us occurring during
fiscal 2008 and 2009. Since December 6, 2007 and through May 27, 2009, we have received disbursements of approximately $40.0 million

from the Columbia Fund with the most recent disbursement occurring on May 27, 2009 at approximately 86% of its original value. We have
recorded $3.7 million of the Columbia Fund as long-term marketable securities at March 31, 2009 because Bank of America, the sponsor of
the Columbia Fund, has indicated that it cannot predict with certainty whether or not the Columbia Fund will redeem this amount within the
next year. While it is our intent to liquidate securities in the Columbia Fund in future periods to reduce our exposure to future deterioration of
these securities, we believe that our operating results and cash flows could be affected significantly by market value adjustments to the
Columbia Fund. There can be no assurance that we will not have to take additional losses on the Columbia Fund.

In July 2008, WorldHeart completed the transactions contemplated by the recapitalization agreement dated June 20, 2008, as amended on
July 31, 2008, among us, WorldHeart, World Heart, Inc., Venrock Partners V, L.P., Venrock Associates V, L.P., Venrock Entrepreneurs Fund
V, L.P., Special Situations Fund III QP LP, Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P., Special
Situations Life Sciences Fund, L.P., Austin Marxe and New Leaf Ventures II, L.P. As a result of the transaction, we received 86 million
common shares of WorldHeart, which represented approximately 21.6% of WorldHeart’s issued and outstanding common shares following
the transaction. The shares were received as a result of our conversion of the full amount of principal and interest owed on the $5.0 million
convertible secured note issued in December 2007, our release of the security interest in all of the assets of WorldHeart that secured the note,
termination of the warrant we held to purchase 3.4 million common shares of WorldHeart issued in December 2007, and forgiveness of other
amounts owed to us by WorldHeart. In October 2008, WorldHeart completed a 30-to-1 reverse stock split, as a result of which we held
2,866,666 common shares of WorldHeart. In December 2008, we sold 135,000 shares of WorldHeart for net proceeds of $0.3 million. As a
result, as of March 31, 2009, we now hold 2,731,666 common shares of WorldHeart, or approximately 20.6% of WorldHeart’s issued and
outstanding shares. We are accounting for this investment using the equity method of accounting. The carrying value of this investment was
zero at March 31, 2009.

Currency Exchange Rates

Our foreign subsidiaries’ functional currency is the Euro. 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. Had a 10% depreciation in the Euro occurred relative
to the U.S. dollar as of March 31, 2009, the result would have been a reduction of stockholders’ equity of approximately $4.5 million.

Fair Value of Financial Instruments

Our financial instruments consist primarily of cash and cash equivalents, short-term and long-term marketable securities, accounts
receivable, and accounts payable. 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. Accordingly, the estimates presented are not necessarily indicative of the amounts that we could realize in a current
market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair
value amounts.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our Consolidated Financial Statements and Supplementary Data are provided under Part IV, Item 15 of this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. 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 (the
“Exchange Act”)) as of March 31, 2009. Based on this evaluation, our principal executive officer and principal financial officer concluded
that, as of March 31, 2009, these disclosure controls and procedures were 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 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 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 fourth quarter of our fiscal year ended March 31, 2009, 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.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is
defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting based on the
framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our assessment under the framework in Internal Control—Integrated Framework, our management concluded that our internal
control over financial reporting was effective as of March 31, 2009.

Important Considerations

Our internal control over financial reporting is a process designed 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. Our
internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures may deteriorate.

Deloitte & Touche LLP, an independent registered public accounting firm that audited our financial statements for the year ended
March 31, 2009, included in this annual report, has issued an attestation report on the effectiveness of our internal control over financial
reporting. This report is set forth below:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
ABIOMED, Inc.
Danvers, Massachusetts

We have audited the internal control over financial reporting of ABIOMED, Inc. and subsidiaries (the “Company”) as of March 31, 2009,
based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive
and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and
other personnel 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. A company’s internal control over financial reporting includes
those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2009,
based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated
financial statements and financial statement schedule as of and for the year ended March 31, 2009 of the Company and our report dated
June 8, 2009 expressed an unqualified opinion on those financial statements and financial statement schedule.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
June 8, 2009

ITEM 9B. OTHER INFORMATION

Not applicable.

ITEM 10. DIRECTOR, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

PART III

The information required by Item 10 of Form 10-K is incorporated by reference to the information in our definitive proxy statement to be

filed within 120 days after the close of our fiscal year captioned:

•

“Proposal No. 1: Election of Directors,”

“Executive Officers and Directors,”

“Audit Committee Report,”

“Corporate Governance,” and

“Section 16(a) Beneficial Ownership Reporting Compliance.”

We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or

controller and persons performing similar functions. A paper copy of our code of ethics may be obtained free of charge by writing to us care
of our Compliance Officer at our principal executive office located at 22 Cherry Hill Drive, Danvers, Massachusetts 01923, or by email at
IR@abiomed.com.

ITEM 11. EXECUTIVE COMPENSATION

The information required by Item 11 of Form 10-K is incorporated by reference to the information in our definitive proxy statement to be

filed within 120 days after the close of our fiscal year end captioned:

•

“Executive Compensation”

“Compensation Discussion and Analysis,”

“Compensation Committee Interlocks and Insider Participation,” and

“Compensation Committee Report.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCK

HOLDER MATTERS

The information required by Item 12 of Form 10-K is incorporated by reference to the information in our definitive proxy statement to be

filed within 120 days after the close of our fiscal year end captioned:

•

“Securities Beneficially Owned by Certain Persons”

“Equity Compensation Plans”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 of Form 10-K is incorporated by reference to the information in our definitive proxy statement to be

filed within 120 days after the close of our fiscal year end captioned:

•

“Executive Compensation,”

“Proposal No. 1: Election of Directors,” and

“Certain Relationships and Related-Person Transactions.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by Item 14 of Form 10-K is incorporated by reference to the information in our definitive proxy statement to be

filed within 120 days after the close of our fiscal year end captioned:

•

“Audit and Other Fees.”

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) The following documents are filed as part of this report:

PART IV

(1) The financial statements from our Annual Report for our fiscal year ending March 31, 2009 are attached hereto.

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at March 31, 2009 and 2008
Consolidated Statements of Operations for the Fiscal Years Ended March 31, 2009, 2008, and 2007
Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended March 31, 2009, 2008, and 2007
Consolidated Statements of Cash Flows for the Fiscal Years Ended March 31, 2009, 2008, and 2007
Notes to Consolidated Financial Statements

(2) Consolidated financial statement schedule

Schedule II: Valuation and qualifying accounts

(3) Exhibits

Exhibit
No.

2.1

3.1

3.2

3.3

3.4

Description

Share Purchase Agreement for the
acquisition of Impella Cardio Systems
AG, dated April 26, 2005.

Restated Certificate of Incorporation.

Restated By-Laws, as amended.

Certificate of Designations of Series A
Junior Participating Preferred Stock—
filed as Exhibit 3.3 to the 1997
Registration Statement.*

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.

4.1

Specimen Certificate of common stock.

10.1*

Form of Indemnification Agreement for
Directors and Officers.

10.2*

1992 Combination Stock Option Plan.

10.3*

10.4*

10.5*

Amendment to 1992 Combination Stock
Option Plan.

1988 Employee Stock Purchase Plan, as
amended.

1989 Non-Qualified Stock Option Plan
for Non-Employee Directors.

10.7*

1998 Equity Incentive Plan.

10.8*

10.9*

2000 Stock Incentive Plan Agreement, as
amended.

Form of Abiomed, Inc. Non-Statutory
Stock Option Agreement for the 2000
Stock Incentive Plan for Directors.

EXHIBIT INDEX

Filed with
this
Form
10-K

Form

8-K

S-3

10-K

S-3

Incorporated by Reference

Filing Date

May 16, 2005

September 29, 1997

May 27, 2004

September 29, 1997

8-K

March 21, 2007

S-1

10-Q

10-Q/A

Schedule 14A

June 5, 1987

October 27, 1995

October 14, 1997

February 8, 2005

October 27, 1995

January 8, 1999

July 15, 2005

Page
F-1
F-2
F-3
F-4
F-5
F-6 to F-26

Exhibit
No.

2.1

3.1

3.2

3.3

3.4

4.1

10.13

10.2

10.11

10.1

Appendix A

10-Q

February 9, 2006

10.16

Exhibit
No.

10.10*

Description

Form of Abiomed, Inc. Non-Statutory
Stock Option Agreement for the 2000
Stock Incentive Plan for Employees or
Consultants.

Filed with
this
Form
10-K

Form

10-Q

Incorporated by Reference

Filing Date

February 9, 2006

Exhibit
No.

10.17

10.11*

2008 Stock Inventive Plan.

Schedule 14A

10.12*

Form of Non-Statutory Stock Option
Agreement for Employees and
Consultants under 2008 Stock Incentive
Plan.

10.13*

Form of Non-Statutory Stock Option
Agreement for Non-Employee Directors
under 2008 Stock Incentive Plan.

10.14*

Form of Restricted Stock Agreement
under 2008 Stock Incentive Plan.

10.15*

Form of Change of Control Agreement.

10.16*

Employment Agreement of Michael R.
Minogue dated April 5, 2004 (including
Change in Control Agreement).

10.17* Amendment to Employment Agreement
with Michael R. Minogue dated
December 31, 2008.

10.18* Amendment to Change in Control

Agreement with Michael R. Minogue
dated December 31, 2008.

10.19*

Inducement stock option granted to
Michael R. Minogue dated April 5, 2004.

10.20* Restricted Stock Agreement between

Abiomed, Inc. and Michael R. Minogue.

10.21* Offer Letter with Robert L. Bowen dated

December 15, 2008.

10.22* Offer letter with David Webber dated

April 23, 2007

10.23*

Separation agreement and release with
Daniel J. Sutherby dated October 10,
2008.

10.24*

Summary of Executive Compensation.

10.25*

Summary of Director Compensation.

10.26*

10.27

10.28

10.29

Form of Employment, Nondisclosure and
Non Competition Agreement.

Registration Rights and Stock Restriction
Agreement between Abiomed, Inc. and
Stockholders of Impella CardioSystems
AG.

Facility Lease dated January 8, 1999 for
the premises at 22 Cherry Hill Drive.

First Amendment to Lease Agreement
dated June 27, 2008 between Abiomed,
Inc. and Leo C. Thibeault, Jr., Trustee of
The Thibeault Nominee Trust.

8-K

10-Q

8-K

10-Q

10-K

8-K

10-Q

8-K

July 9, 2008

August 18, 2008

Appendix A

10.1

August 18, 2008

August 9, 2004

February 9, 2009

August 9, 2004

October 9, 2005

December 22, 2008

August 9, 2007

February 9, 2009

June 16, 2008

June 14, 2006

May 16, 2005

February 12, 1999

July 2, 2008

10.2

10.3

10.4

10.10

10.1

10.11

10.15

99.2

10.1

10.21

10.20

10.1

Exhibit
No.

10.30

10.31

10.32

10.33

10.34

10.35

11.1

21.1

23.1

31.1

31.2

Description

Lease Agreement dated as of July 18, 2008 by
and among Abiomed, Inc., Abiomed Athlone
Limited, and J.J. Rhatigan and Co.

Recapitalization Agreement dated June 20, 2008
by and among World Heart Corporation, World
Heart Inc., ABIOMED, Inc., Venrock Partners
V, L.P., Venrock Associates V, L.P. and
Venrock Entrepreneurs Fund V, L.P., Special
Situations Fund III QP LP, Special Situations
Cayman Fund, L.P., Special Situations Private
Equity Fund, L.P., Special Situations Life
Sciences Fund, L.P. and Austin Marxe.

Amendment No. 1 to Recapitalization
Agreement dated June 31, 2008 by and among
World Heart Corporation, World Heart Inc.,
ABIOMED, Inc., Venrock Partners V, L.P.,
Venrock Associates V, L.P. and Venrock
Entrepreneurs Fund V, L.P., Special Situations
Fund III QP LP, Special Situations Cayman
Fund, L.P., Special Situations Private Equity
Fund, L.P., Special Situations Life Sciences
Fund, L.P. , Austin Marxe and New Leaf
Ventures II, L.P.

Software License Agreement between Abiomed,
Inc. and AnswerThink, Inc. dated November 30,
2005.

Consulting Agreement between Abiomed, Inc.
and AnswerThink, Inc. dated September 15,
2006.

Distribution Agreement between Abiomed, Inc.
and MEDIX Japan, Inc. dated November 4,
2006.

Statement regarding computation of Per Share
Earnings (see Note 2, Notes to Consolidated
Financial Statements).

Subsidiaries of the Registrant.

Consent of Deloitte & Touche LLP, independent
registered public accounting firm.

Rule 13a—14(a)/15d—14(a) certification of
principal executive officer.

Rule 13a—14(a)/15d—14(a) certification of
principal accounting officer.

32.1

Section 1350 certification.

* Management contract or compensatory plan.

Filed with
this
Form
10-K

Form

8-K

Incorporated by Reference

Filing Date

July 30, 2008

Exhibit
No.

10.1

June 26, 2008

99.1

8-K

August 6, 2008

99.1

10-Q

February 9, 2006

February 8, 2007

10.20

10.23

10.24

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.

SIGNATURES

Dated: June 8, 2009

ABIOMED, Inc.

By:

/S/ ROBERT L. BOWEN

Robert L. Bowen
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on

behalf of the registrant and in the capacities and on the dates indicated.

SIGNATURE

TITLE

/S/ MICHAEL R. MINOGUE

Michael R. Minogue

Chief Executive Officer, President and
Chairman (Principal Executive Officer)

/S/ ROBERT L. BOWEN

Robert L. Bowen

Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)

/S/ W. GERALD AUSTEN

Director

W. Gerald Austen

/S/ RONALD W. DOLLENS

Director

Ronald W. Dollens

/S/ LOUIS E. LATAIF

Director

Louis E. Lataif

/S/ DESMOND H. O’CONNELL, JR.

Director

Desmond H. O’Connell, Jr.

/S/ DOROTHY E. PUHY

Director

Dorothy E. Puhy

/S/ ERIC A. ROSE

Eric A. Rose

Director

/S/ HENRI A. TERMEER

Director

Henri A. Termeer

/S/ MARTIN P. SUTTER

Director

Martin P. Sutter

DATE

June 8, 2009

ABIOMED, INC.

Consolidated Financial Statements

Index

Page

F-1
F-2
F-3
F-4
F-5
F-6 to F-26

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
ABIOMED, Inc.
Danvers, Massachusetts

We have audited the accompanying consolidated balance sheets of ABIOMED, Inc. and subsidiaries (the “Company”) as of March 31, 2009,
and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period
ended March 31, 2009. Our audits also included the financial statement schedule listed in the Index at Item 15. These financial statements and
financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of ABIOMED, Inc. and
subsidiaries as of March 31, 2009 and 2008, and the results of their operations and their cash flows for each of the three years in the period
ended March 31, 2009 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such
financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

As discussed in Note 14 to the consolidated financial statements, the Company adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes—an Interpretation of Financial Accounting Standards Board Statement No. 109 , effective
April 1, 2007.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s
internal control over financial reporting as of March 31, 2009, based on the criteria established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 8, 2009 expressed an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ Deloitte & Touche LLP

Boston, Massachusetts
June 8, 2009

F-1

ABIOMED, INC. AND SUBSIDIARIES

Consolidated Balance Sheets
(in thousands, except share data)

ASSETS

Current assets:

Cash and cash equivalents

Short-term marketable securities

Accounts receivable, net

Inventories

Prepaid expenses and other current assets

Total current assets

Property and equipment, net

Intangible assets, net

Goodwill

Long-term marketable securities

Other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued expenses

Deferred revenue

Total current liabilities

Long-term deferred tax liability

Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 15)

Stockholders’ equity:

Class B Preferred Stock, $.01 par value

Authorized—1,000,000 shares; Issued and outstanding—none

Common stock, $.01 par value

Authorized—100,000,000 shares; Issued—36,736,843 shares at March 31, 2009 and 32,779,404 shares

at March 31, 2008;

Outstanding—36,685,889 shares at March 31, 2009 and 32,768,385 shares at March 31, 2008

Additional paid-in-capital

Accumulated deficit

Treasury stock at cost—50,954 at March 31, 2009 and 11,019 shares at March 31, 2008

Accumulated other comprehensive (loss) income

Total stockholders’ equity

Total liabilities and stockholders’ equity

See notes to consolidated financial statements

F-2

March 31,

2009

2008

1,785

2,042

55,394

15,724

14,777

809

36,257

14,071

17,428

1,705

88,489

71,503

7,792

4,359

7,551

6,921

31,295

31,563

3,721

302

—

493

$ 135,958

$ 118,031

5,550

10,818

1,211

17,579

2,086

310

9,024

9,290

1,162

19,476

4,740

221

19,975

24,437

—

367

—

328

362,097

300,787

(243,991)

(212,394)

(827)

(1,663)

(116)

4,989

115,983

93,594

$ 135,958

$ 118,031

ABIOMED, INC. AND SUBSIDIARIES

Consolidated Statements of Operations
(in thousands, except per share data)

Revenue:

Products

Funded research and development

Costs and expenses:

Cost of product revenue excluding amortization of intangibles

Research and development

Selling, general and administrative

Arbitration decision

Expensed in-process research and development

Amortization of intangible assets

Loss from operations

Other (expense) income:

Investment (expense) income, net

Gain on sale of WorldHeart stock

Change in fair value of WorldHeart note receivable and warrant

Other (expense) income, net

Loss before provision for income taxes

Provision for income taxes

Net loss

Basic and diluted net loss per share

Weighted average shares outstanding

Fiscal Years Ended March 31,

2009

2008

2007

$ 72,512

$ 58,322

$ 50,408

698

619

241

73,210

58,941

50,649

20,437

25,328

55,357

—

1,606

15,065

24,917

52,658

1,206

—

1,582

12,012

22,292

42,448

—

800

1,608

102,728

95,428

79,160

(29,518)

(36,487)

(28,511)

(1,404)

1,625

1,045

313

—

(236)

—

(5,000)

(541)

—

(1,327)

(3,916)

1,105

(30,845)

(40,403)

(27,406)

752

527

475

$ (31,597) $(40,930) $(27,881)

(0.91) $

(1.26) $

(1.03)

34,882

32,465

27,124

See notes to consolidated financial statements

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ABIOMED, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows
(in thousands)

Operating activities:
Net loss
Adjustments required to reconcile net loss to net cash used for operating activities:

Depreciation and amortization
Bad debt expense (recoveries)
Stock-based compensation
Write-down of inventory
Loss on disposal of fixed assets
Deferred tax provision
Arbitration decision
Change in unrealized loss on short-term marketable securities
Write-down of WorldHeart note receivable and warrant
Gain on sale of WorldHeart common stock

Changes in assets and liabilities:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable
Accrued expenses and other long-term liabilities
Deferred revenue

Net cash used for operating activities

Investing activities:

Reclassification of cash equivalents to short-term marketable securities
Purchases of short-term marketable securities
Proceeds from the sale and maturity of short-term securities
Proceeds from the sale of WorldHeart common stock
Cost of acquisition, net of cash acquired
Loan to WorldHeart
Increase in restricted cash
Additions to intangible assets
Expenditures for property and equipment

Net cash (used for) provided by investing activities

Financing activities:

Issuance of common stock
Return of common stock from escrow
Proceeds from the exercise of stock options
Payments in lieu of issuance of common stock for payroll taxes
Proceeds from employee stock purchase plan
Repurchase of warrants

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental disclosures:

Taxes paid, net of refunds
Value of common shares issued for business acquisition
Fixed assets in accounts payable

See note to consolidated financial statements

F-5

Fiscal Years Ended March 31,

2009

2008

2007

$(31,597) $(40,930) $(27,881)

5,016
438
8,834
1,444
165
721
—
510
—
(313)

(2,539)
(1,598)
992
(2,402)
1,948
76

6,124
(50)
5,376
963
255
527
729
1,157
5,000
—

(2,797)
(11,078)
(177)
3,237
2,331
459

3,915
7
5,848
207
75
475
—
—
—
—

(1,920)
(4,095)
159
1,572
1,618
200

(18,305)

(28,874)

(19,820)

—
(60,180)
36,813
313
—
—
—
—
(3,751)

(49,259)
(17,131)
34,454
—
—
(5,000)
(140)
(69)
(3,760)

—
(17,663)
35,187
—

(9)

—
—
(47)
(2,373)

(26,805)

(40,905)

15,095

41,970
—
4,708
(711)
263
—

46,230
(1,377)

874
—
2,811
—
253
(1,868)

2,070
105

(257)
2,042

(67,604)
69,646

63,551
(50)
2,751
—
305
—

66,557
(18)

61,814
7,832

$ 1,785

$ 2,042

$ 69,646

$
242
$ 5,574
44
$

$
18
$ — $ 5,574
424
$

530

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
(In thousands, except share data)

Note 1. Nature of Operations

Abiomed, Inc. (the “Company” or “Abiomed”) is a leading provider of medical devices in circulatory support that offers a continuum of care
in heart recovery to acute heart failure patients. The Company’s strategy is focused on establishing heart recovery as the goal for all acute
cardiac attacks. The Company’s products 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 products can be used in a broad range of clinical settings, including by cardiologists for patients who
are in pre-shock or in need of prophylactic support in the cardiac catheterization lab, or cath lab, and by heart surgeons for patients in
profound shock. Abiomed is focused on increasing awareness of heart recovery and establishing it as the goal for all acute patients
experiencing cardiac attacks, or heart attacks, with failing but potentially recoverable hearts. The Company expects that recovery awareness
and utilization of its products will significantly increase the number of patients able to return home from the hospital with their own hearts.

Note 2. Summary of Significant Accounting Policies

The accompanying consolidated financial statements reflect the application of certain significant accounting policies described below.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. On an
ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, inventories, impairment of intangible
assets and goodwill, financial instruments, accrued expenses, income taxes including the valuation allowance for deferred tax assets, stock-
based compensation, valuation of long-lived assets and investments, contingencies and litigation. The Company bases its estimates on
historical experiences and on various other assumptions that are believed to be reasonable, the results of which form the basis for making
judgments about the carrying values of assets and liabilities. Actual results could differ from those estimated.

Major Customers and Concentrations of Credit Risk

Abiomed primarily sells its products to hospitals and distributors. No customer accounted for more than 10% of total product revenues in
fiscal year 2009, 2008, or 2007. No customer had an accounts receivable balance greater than 10% of total accounts receivable at the end of
fiscal years 2009 and 2008.

Credit is extended based on an evaluation of a customer’s financial condition and generally collateral is not required. To date, credit losses
have not been significant and the Company maintains an allowance for doubtful accounts based on its assessment of the collectibility of
accounts receivable. Receivables are geographically dispersed, primarily throughout the U.S., as well as in Europe and other foreign countries
where formal distributor agreements exist.

Financial instruments which potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, and
marketable securities. Management mitigates credit risk by limiting the investment type and maturity to securities that preserve capital,
maintain liquidity and have a high credit quality. At March 31, 2009, the Company had $52.1 million held in funds that invest solely in U.S.
Treasury securities.

Cash Equivalents and Marketable Securities

The Company classifies any marketable security with a maturity date of 90 days or less at the time of purchase as a cash equivalent. Cash
equivalents are carried on the balance sheet at fair market value.

F-6

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 2. Summary of Significant Accounting Policies (Continued)

The Company classifies any security with a maturity date of greater than 90 days at the time of purchase as marketable securities and
classifies marketable securities with a maturity date of greater than one year from the balance sheet date as long-term marketable securities, as
amounts are not expected to be redeemed within a year. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115,
Accounting for Certain Investments in Debt and Equity Securities, securities that the Company has the positive intent and ability to hold to
maturity are reported at amortized cost and classified as held-to-maturity securities. If the Company does not have the intent and ability to
hold a security to maturity, it reports the investment as available-for-sale securities. The Company reports available-for-sale securities at fair
value and includes unrealized gains and, to the extent deemed temporary, losses in stockholder’s equity. If any adjustment to fair value
reflects a decline in the value of the investment, the Company considers available evidence to evaluate whether the decline is “other than
temporary” and, if so, marks the security to market through a charge in the consolidated statements of operations.

Inventories

Inventories are stated at the lower of cost or market. Cost is based on the first in, first out method. The Company regularly reviews inventory
quantities on hand and writes down to its net realizable value any inventory believed to be impaired. If actual demand or market conditions are
less favorable than projected demand, additional inventory write-downs may be required that could adversely impact financial results for the
period in which the additional excess or obsolete inventory is identified.

Property and Equipment

Property and equipment is recorded at cost less accumulated depreciation. Depreciation is computed using the straight line method based on
estimated useful lives of two to ten years for machinery and equipment, three to seven years for computer software, and four to ten years for
furniture and fixtures. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or the estimated
useful lives of the related assets. Expenditures for maintenance and repairs are expensed as incurred. Expenditures for renewals or betterments
are capitalized.

Impairment of Long-Lived Assets, Intangible Assets and Goodwill

Long-lived assets (primarily property and equipment, intangible assets and goodwill) are reviewed for impairment losses whenever events or
changes in circumstances indicate the carrying amount may not be recoverable and, in the case of goodwill, at least annually. An impairment
loss would be recognized based on the amount by which the carrying value of the asset exceeds its fair value. Fair value is determined
primarily using the estimated future cash flows associated with the asset under review discounted at a rate commensurate with the risk
involved and other valuation techniques.

The Company capitalizes intellectual property costs relating to patenting its technology as they are incurred, excluding costs associated with
Company personnel. Capitalized costs, the majority of which represent legal costs, reflect the cost of both awarded patents and patents
pending. The Company amortizes the cost of these patents over the estimated useful life of the patents, generally up to seven years. If the
Company elects to stop pursuing a particular patent application, determines that a patent application is not likely to be awarded for a particular
patent, or elects to discontinue payment of required maintenance fees for a particular patent, the Company records as expense the net
capitalized amount of such patent application or patent.

In accordance with the provisions of SFAS No. 142, Goodwill and Other Intangible Assets, the Company assesses the realizability of
goodwill annually at October 31, as well as whenever events or changes in circumstances suggest that the carrying amount may not be
recoverable. These events or circumstances generally include operating losses or a significant decline in earnings associated with the acquired
business or asset. The Company’s ability to realize the value of the goodwill will depend on the future cash flows of the business. If the
Company is not able to realize the value of goodwill, the Company may be required to incur material charges relating to the impairment of
those assets. The Company completed its annual review of goodwill as of October 31, 2008 and determined that no write-down for
impairment was necessary. In light of a decrease in the Company’s market capitalization since October 31, 2008 and the difficult worldwide
economic conditions in recent months, the Company updated its impairment review as of March 31, 2009 and determined that its goodwill
was not impaired.

F-7

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 2. Summary of Significant Accounting Policies (Continued)

Financial Instruments

SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure for estimates of the fair value of financial
instruments. The Company’s financial instruments were comprised of cash and cash equivalents, marketable securities, accounts receivable,
note receivable and warrant and accounts payable, the carrying amounts of which approximate fair market value.

The Company entered into a convertible note purchase agreement with World Heart Corporation (“WorldHeart”) in December 2007. Under
the agreement, the Company loaned $5.0 million to WorldHeart, with the note and accrued interest, at 8% per annum, convertible at the
Company’s option into common stock of WorldHeart. The Company advanced $1.0 million of the loan in December 2007 with the remaining
$4.0 million advanced in January 2008. The conversion feature within the note was an embedded derivative instrument under SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, and accordingly, was separately valued within the carrying value of the note
receivable. The Company also received a warrant to purchase up to 3,400,000 shares of WorldHeart common stock.

The grant date fair values of the assets associated with the note receivable and the warrant, in excess of cash paid were deemed to be deferred
income, as analogized to SFAS No. 91, Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases. Similar to other loan fees, the deferred income related to the grant date fair value of the note receivable and the
warrant will be recognized over the life of the note receivable, if deemed to be realizable as a yield adjustment.

The Company recorded derivative financial instruments on its consolidated balance sheet at fair value. Changes in the fair value of these
derivative financial instruments were recorded as “Change in fair value of WorldHeart note receivable and warrant” in the consolidated
statements of operations. The measurement of fair value was based on valuation methodologies considered appropriate by the Company’s
management. The estimated fair value of the embedded derivative and warrant was determined using the Black-Scholes method. Because of
inherent uncertainty of valuations of derivative instruments, estimated fair values may differ from the value that would have been used had a
ready market for the investment existed and these differences could have a material impact in the consolidated statements of operations.

In May 2008, WorldHeart filed a Form 8-K disclosing that it had limited cash available to continue operations and that if it was unable to
secure additional funding, it would be forced to take extraordinary business measures which could include filing for bankruptcy, ceasing
operations and liquidating assets. Due to these events, the Company recorded an impairment charge of $5.0 million during fiscal 2008 relating
to its note receivable to WorldHeart and its associated derivative instruments (embedded conversion feature and warrant).

In July 2008, WorldHeart completed the transactions contemplated by the recapitalization agreement dated June 20, 2008, as amended on
July 31, 2008, among the Company, WorldHeart, and the other parties named therein. As a result of the transaction, the Company received
86 million common shares of WorldHeart, which represented approximately 21.6% of WorldHeart’s issued and outstanding common shares
following the transaction. The shares were received as a result of the Company’s conversion of the full amount of principal and interest owed
on the $5.0 million convertible note issued in December 2007, the Company’s release of the security interest in all of the assets of WorldHeart
that secured the note, termination of the warrant the Company held to purchase 3.4 million common shares of WorldHeart, forgiveness of
other amounts owed to the Company by WorldHeart, the amendment of the Company’s rights with respect to the distribution of WorldHeart
products, and the appointment of a director or observer to WorldHeart’s board of directors. In October, 2008, WorldHeart completed a 30-to-1
reverse stock split, as a result of which the Company held 2,866,666 common shares of WorldHeart. In December 2008, the Company sold
135,000 shares of WorldHeart for net proceeds of $0.3 million, which was, as a result of the Company’s basis having been reduced to zero,
recorded as a gain on the sale of WorldHeart common stock during the three months ended December 31, 2008. As of March 31, 2009, the
Company held 2,731,666 common shares of WorldHeart, or approximately 20.6% of WorldHeart’s issued and outstanding shares. The
Company is accounting for this investment using the equity method of accounting. The carrying value of this investment was zero at
March 31, 2009.

Accrued Expenses

As part of the process of preparing its financial statements, the Company is required to estimate accrued expenses. This process involves
identifying services that third parties have performed and estimating the level of service performed and the associated cost incurred on these
services as of each balance sheet date in its financial statements. Examples of estimated accrued expenses include contract service fees, such
as amounts due to clinical research organizations, professional service fees, such as attorneys and accountants, and investigators in
conjunction with clinical trials and third party expenses relating to marketing efforts associated with commercialization of the Company’s
product and product candidates. In the event that the Company does not identify certain costs that have been incurred or it under or over-
estimates the level of services or the costs of such services, reported expenses for a reporting period could be overstated or understated. The
date in which certain services commence, the level of services performed on or before a given date, and the cost of services is often subject to
the Company’s judgment. The Company makes these judgments and estimates based upon known facts and circumstances.

F-8

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 2. Summary of Significant Accounting Policies (Continued)

Revenue Recognition

The Company recognizes revenue when evidence of an arrangement exists, title has passed (generally upon shipment) or services have been
rendered, the selling price is fixed or determinable and collectibility is reasonably assured in accordance with the SEC Staff Accounting
Bulletin No. 104 (“SAB 104”). The Company also follows the guidance of Emerging Issues Task Force (“EITF”) No. 00-21, Revenue
Arrangements with Multiple Deliverables, when transactions include multiple elements. Revenue from product sales to new customers is
deferred until training on the use of the products has occurred. All costs related to product shipment are recognized at time of shipment. The
Company does not provide for rights of return to customers on product sales.

Maintenance and service support contract revenues are recognized ratably over the term of the service contracts based upon the term of the
service contract. In limited instances, the Company also rents its console medical devices on a month-to-month basis or for a longer specified
period of time to customers for which revenue is recognized as earned.

Government-sponsored research and development contracts and grants generally provide for payment on a cost-plus-fixed-fee basis. Revenues
from these contracts and grants are recognized as work is performed. Under contracts in which the Company elects to spend significantly
more on the development project during the term of the contract than the total contract amount, the Company prospectively recognizes
revenue on such contracts ratably over the term of the contract as related research and development costs are incurred.

Product Warranty

Consoles sold are covered by a one-year warranty for which estimated contractual warranty obligations are recorded as an expense at the time
of shipment. The Company’s products are subject to rigorous regulation and quality standards.

Translation of Foreign Currencies

All assets and liabilities of the Company’s non-U.S. subsidiaries are translated at year-end exchange rates and revenues and expenses are
translated at average exchange rates for the year. The functional currency of non-U.S. subsidiaries is primarily denominated in Euro.
Resulting translation adjustments are reflected in the accumulated other comprehensive (loss) income component of stockholders’ equity.
Currency transaction gains and losses are included in the statements of operations.

Net Loss Per Share

In accordance with SFAS No. 128, Earnings Per Share, basic net loss per share is computed by dividing net loss by the weighted-average
number of common shares outstanding during the fiscal year. Diluted net loss per share is computed by dividing net loss by the weighted-
average number of dilutive common shares outstanding during the fiscal year. Dilutive shares outstanding are calculated by adding to the
weighted shares outstanding any potential (unissued) shares of common stock and warrants based on the treasury stock method. Since the
Company reported a net loss in the fiscal years ended March 31, 2009, 2008 and 2007, 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 fiscal years when a
loss is reported the calculation of basic and dilutive loss per share results in the same value.

The calculation of diluted weighted average shares outstanding for the fiscal year ended March 31, 2007 excludes warrants to purchase up to
400,000 shares of common stock issued in connection with the purchase of intellectual property. Also excluded from the calculation of diluted
weighted average shares outstanding for the fiscal years ended March 31, 2009, 2008, and 2007 are stock options outstanding in the amount of
4,583,345, 4,435,928, and 4,305,920, respectively, and unvested shares of restricted stock for the fiscal years ended March 31, 2009, 2008,
and 2007 in the amount of 480,374, 54,000, and 8,000, respectively.

Comprehensive Loss

Comprehensive loss is comprised of net loss and other comprehensive (loss) income. Other comprehensive (loss) income includes certain
changes in equity that are excluded from net loss such as foreign currency translation adjustments.

F-9

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 2. Summary of Significant Accounting Policies (Continued)

Accounting for Stock-Based Compensation

The Company accounts for stock-based compensation under SFAS No. 123(R), Share-based Payment. SFAS No. 123(R) requires entities to
recognize compensation costs for all share-based payments, including grants of employee stock options, based on the grant-date fair value of
those share-based payments (with limited exceptions), adjusted for expected forfeitures.

Effective April 1, 2006, the Company adopted the provisions of SFAS No. 123(R) using the modified prospective application transition
method. Under this transition method, the compensation cost recognized beginning April 1, 2006 includes compensation cost for (i) all share-
based payments granted prior to, but not yet vested as of April 1, 2006, based on the grant-date fair value estimated in accordance with the
original provisions of SFAS No. 123, and (ii) shares issued in offerings under the Employee Stock Purchase Plan with offering periods
commencing April 1, 2006 and stock options granted subsequent to March 31, 2006 based on the grant-date fair value estimated using the
Black-Scholes valuation model in accordance with the provisions of SFAS No. 123(R). Compensation cost is recognized on a straight-line
basis over the requisite service period for share-based payments issued subsequent to the adoption of SFAS No. 123(R). For stock options
issued prior to the adoption of SFAS No. 123(R), the accelerated method is used for expense recognition.

The Company has elected to calculate the available additional paid-in capital pool for purposes of determining the impact of tax deficiencies
using the alternative transition method described in FSP 123(R)-3, Transition Election Related to Accounting for the Tax Effects of Share-
Based Payment Awards.

Recent Accounting Pronouncements

SFAS No. 141(R)—In December 2007, the FASB issued SFAS No. 141(R), Business Combinations. SFAS No. 141(R) applies to any
transaction or other event that meets the definition of a business combination. Where applicable, SFAS No. 141(R) establishes principles and
requirements for how the acquirer recognizes and measures identifiable assets acquired, liabilities assumed, noncontrolling interest in the
acquiree and goodwill or gain from a bargain purchase. In addition, SFAS No. 141(R) determines what information to disclose to enable users
of the financial statements to evaluate the nature and financial effects of the business combination. This statement is to be applied
prospectively for transactions occurring in fiscal years beginning after December 15, 2008. SFAS 141(R) will impact the Company’s
accounting for business combinations, if any, completed beginning April 1, 2009.

SFAS No. 160—In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements, an
amendment of ARB No. 51. SFAS No. 160 amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. It also amends certain of the consolidation procedures under ARB No. 51
for consistency with the requirements of FASB Statement No. 141(R). This statement is effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008. The statement shall be applied prospectively as of the beginning of the fiscal year
in which the statement is initially adopted. The Company will adopt SFAS No. 160 for any acquisitions closing after March 31, 2009.

SFAS No. 161—In March 2008, the FASB issued Statement No. 161, Disclosures About Derivative Instruments and Hedging Activities. This
statement is intended to improve financial reporting about derivative instruments and hedging activities by enhanced disclosures to better
understand their effects on a company’s financial position, results of operation and cash flows. This standard is effective for interim and
annual financial statements beginning after November 15, 2008. The Company adopted the disclosure requirements of this pronouncement in
the quarter ended December 31, 2008.

EITF 08-06—In November 2008, the EITF reached a final consensus on Issue No. 08-06 (“EITF No. 08-06”), Equity Method Investment
Accounting Considerations, effective on a prospective basis for fiscal years, beginning after December 15, 2008. The Company will adopt
EITF 08-06 effective April 1, 2009, and does not expect it to have a material impact on its financial position or results of operations.

Note 3. Restricted Cash

The Company had restricted cash of approximately $0.3 million and $0.4 million in other assets at March 31, 2009 and 2008, respectively.
This cash represents a security deposit for a letter of credit expiring in January 2011 associated with a global telecommunications equipment
operating lease.

F-10

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 4. Fair Value Measurements

Effective April 1, 2008, the Company implemented SFAS No. 157, Fair Value Measurement (“SFAS No. 157”), for financial assets and
liabilities that are re-measured and reported at fair value at each reporting period. However, the FASB deferred the effective date of SFAS No.
157 for one year as it relates to fair value measurement requirements for nonfinancial assets and nonfinancial liabilities that are not recognized
or disclosed at fair value on a recurring basis. The adoption of SFAS No. 157 did not have a material impact on financial results.

As defined in SFAS No. 157, fair value is the price that would be received to sell 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 value is 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 information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of
March 31, 2009 and indicates the fair value hierarchy of the valuation techniques utilized to determine such fair value:

Assets:

U.S. Treasury Securities
Columbia Strategic Cash Portfolio

Level 1

Level 2

Level 3

Total

(in $000’s)

$52,102
—

$52,102

$—
—

$—

$ — $52,102
7,006

7,006

$7,006

$59,108

Level 3 financial assets are comprised of the Columbia Fund investment. The Columbia Fund is an investment portfolio sponsored by Bank of
America that contained approximately $0.6 billion in assets at March 31, 2009. Certain of the securities in the Columbia Fund have their fair
values determined through readily available market data, but there are many securities in the Columbia Fund for which there is limited market
activity such that the determination of fair value requires significant judgment or estimation. Given current market conditions, as these
securities are not actively traded, certain significant inputs (e.g. yield curves, spreads, prepayments and volatilities) are unobservable. These
securities are valued primarily using broker pricing models that incorporate transaction details such as contractual terms, maturity, timing and
amount of future cash inflows, as well as assumptions about liquidity. As a result, the Company has categorized these securities in Level 3 of
the fair value hierarchy. At March 31, 2009, approximately 79% of the assets in the Columbia Fund were invested in mortgage-backed
securities (U.S. subprime and non-subprime residential mortgages, U.S. commercial mortgages and foreign residential mortgages) and asset-
backed securities (credit card, auto loan and student loan backed securities). The remaining assets in the Fund are in cash, corporate bonds and
other assets, with these securities being valued based on recently executed prices.

F-11

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 4. Fair Value Measurements (Continued)

The table below provides a summary of the changes in fair value, including net transfers, of all financial assets measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) for the twelve months ended March 31, 2009:

Balance at March 31, 2008

Total realized and unrealized losses included in earnings
Cash received in settlement

Balance at March 31, 2009

Note 5. Marketable Securities

Level 3
Columbia Strategic
Cash Portfolio

(in $000’s)
$ 28,826
(2,091)
(19,729)

$ 7,006

The Company has marketable securities at March 31, 2009 and 2008, respectively, that consist of and are classified on the balance sheet as
follows:

Short-term marketable securities
Long-term marketable securities

The Company’s marketable securities at March 31, 2009 and 2008 are invested in the following:

March 31,

2009

2008

(in $000’s)

$55,394
3,721

$36,257

—

$59,115

$36,257

At March 31, 2009:

Columbia Strategic Cash Portfolio

US Treasury Securities

Accrued Interest

At March 31, 2008:

Columbia Strategic Cash Portfolio

US Treasury Securities

Accrued Interest

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair
Value

(in $000’s)

$ 8,404

52,102

$ —

$(1,398)

$ 7,006

—

52,102

$60,513

$ —

$(1,398)

$59,115

$29,715

$ —

$ (889)

$28,826

7,323

108

—

7,323

108

$37,146

$ —

$ (889)

$36,257

The Columbia Fund is comprised of investments in cash, corporate bonds, other assets, mortgage-backed securities and asset-backed
securities. On December 6, 2007, the Columbia Fund ceased accepting redemption requests from new or current investors and changed its
method of valuing the securities in the Columbia Fund to market value rather than amortized cost. As a result, the Company reclassified the
securities in the Columbia Fund from cash equivalents to short-term marketable securities as the Columbia Fund was no longer expected to
have a maturity of less than 90 days. The Company deemed that the unrealized loss on the Columbia Fund was not temporary as the market
value of the Columbia Fund was approximately 83% of its carrying value at March 31, 2009 and the Company does not expect to fully
recover the original value of its investment. The Company recorded realized and unrealized losses of $2.1 million and $1.2 million related to
the Columbia Fund in the statements of operations for the years ended March 31, 2009 and 2008, respectively. The Columbia Fund is being
liquidated with distributions to the Company occurring and expected to occur during the next twelve months and beyond. Since December 6,
2007 through May 27, 2009, the Company has received disbursements of approximately $40.0 million, or 85% of the original units in the
Columbia Fund, with the most recent disbursement occurring on May 27, 2009 at approximately 86% of original value. The Company has
recorded $3.7 million of the Columbia Fund as long-term marketable securities at March 31, 2009 because Bank of America has indicated that
it cannot predict with certainty whether or not it will redeem this amount within the next year. The Company also has $52.1 million in funds
that invest solely in U.S. Treasury Securities at March 31, 2009.

F-12

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 5. Marketable Securities (Continued)

The Company recorded $1.4 million in investment expense in fiscal 2009, of which $2.1 million related to losses on the Columbia Fund and
$0.7 million was net investment income. The Company recorded $1.6 million and $1.0 million in investment income for fiscal 2008 and 2007,
respectively. The investment income for fiscal 2008 included a $1.2 million loss on the Columbia Fund and $2.8 million in net investment
income.

Note 6. Accounts Receivable

The components of accounts receivable are as follows:

Trade receivables
Allowance for doubtful accounts

Note 7. Inventories

The components of inventories are as follows:

Raw materials and supplies
Work-in-progress
Finished goods

March 31,

2009

2008

(in $000’s)

$15,908
(184)

$14,224
(153)

$15,724

$14,071

March 31,

2009

2008

(in $000’s)

$ 4,635
2,509
7,633

$ 7,419
4,748
5,261

$14,777

$17,428

All of the Company’s inventories relate to circulatory care product lines that include the iPulse, AB5000, BVS 5000, IAB, AbioCor and
Impella product platforms. Finished goods and work-in-process inventories consist of direct material, labor and overhead. During the years
ended March 31, 2009, 2008, and 2007, the Company recorded $1.4 million, $0.9 million, and $0.2 million in writedowns for excess
quantities and obsolescence.

From time to time, the Company loans finished goods inventory on a short-term basis to customers for demonstration purposes and this
inventory is amortized over a one to five-year life. The cost of “demo” inventory and the net carrying value are reflected in the table below:

Cost of inventory used for demo purposes
Accumulated amortization

March 31,

2009

2008

(in $000’s)

$ 5,680
(4,386)

$ 3,815
(3,148)

$ 1,294

667

Amortization expense related to demo inventory was $1.4 million, $2.3 million, and $0.5 million for the years ending March 31, 2009, 2008
and 2007, respectively. During fiscal 2008, the Company recorded an impairment charge of $1.2 million to accelerate the amortization for
AB5000 consoles used for demo purposes as the Company no longer actively manufactures the AB5000 console.

F-13

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 8. Property and Equipment

The components of property and equipment are as follows:

Machinery and equipment
Furniture and fixtures
Leasehold improvements
Construction in progress

Total cost
Less accumulated depreciation

March 31,

2009

2008

(in $000’s)

$ 9,944
873
2,696
2,547

$ 13,758
1,130
2,434
1,167

16,060
(8,268)

18,489
(10,938)

$ 7,792

$ 7,551

Depreciation expense related to property and equipment was $2.1 million, $2.2 million, and $1.9 million for the years ending March 31, 2009,
2008 and 2007, respectively.

Note 9. Intangible Assets and Goodwill

The carrying amount of goodwill at March 31, 2009 and 2008, was $31.3 million and $31.6 million, respectively, and has been recorded in
connection with the Company’s acquisition of Impella.

Balance at April 1, 2007
Exchange rate impact

Balance at March 31, 2008
Purchase price adjustments - milestone payment to Impella CardioSystems AG
Exchange rate impact

Balance at March 31, 2009

(in $000’s)

$26,708
4,855

31,563
5,583
(5,851)

$31,295

In June 2008, the Company received FDA 510(k) clearance of its Impella 2.5 product, triggering an obligation to pay approximately $5.6
million of contingent payments related to the May 2005 acquisition of Impella. In connection with this transaction, the Company issued
343,075 shares of its common stock to the former Impella shareholders and recorded an increase to goodwill of $5.6 million.

In April 2009, the Company received FDA 510(k) clearance of its Impella 5.0 product, triggering an obligation to pay approximately $5.6
million of contingent payments related to the May 2005 acquisition of Impella. In May 2009, the Company paid $1.8 million of this final
milestone in cash and elected to pay the remaining amount through the issuance of approximately 664,612 shares of its common stock. This
payment will result in a $5.6 million increase in goodwill during the first quarter of fiscal 2010.

The components of intangible assets are as follows:

Patents
Trademarks and tradenames
Distribution agreements
Acquired technology

March 31, 2009

March 31, 2008

Cost

Accumulated
Amortization

Net Book
Value

Cost

Accumulated
Amortization

Net Book
Value

$6,725
342
652
2,247

$9,966

(in $000’s)

$3,800
185
365
1,257

$5,607

F-14

$2,925
157
287
990

$4,359

$ 8,836
527
774
2,669

$12,806

(in $000’s)

$4,192
259
322
1,112

$5,885

$4,644
268
452
1,557

$6,921

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Amortization expense for intangible assets was $1.6 million, $1.6 million and $1.3 million for the years ending March 31, 2009, 2008 and
2007, respectively. The Company’s expected amortization expense will be $1.4 million in each of fiscal 2010 through 2012 and $0.1 million
for fiscal 2013.

Note 10. Warranties

The Company accrues for estimated warranty costs on its product sales at the time of sale. The following table summarizes the activities in the
warranty reserve for the fiscal years ended March 31, 2009, 2008 and 2007:

Balance at March 31

Accrual for warranties

Warranty cost incurred during the period

Balance at March 31

Note 11. Arbitration Decision and Warrants Repurchase

Arbitration Decision

March 31,

2009

2008

2007

(in $000’s)

$ 214

$ 157

$ 167

442

(264)

271

(214)

132

(142)

$ 392

$ 214

$ 157

In May 2006, Richard A. Nazarian, as Selling Stockholder Representative, filed a demand for arbitration (subsequently amended) with the
American Arbitration Association. The claims arose out of the Company’s purchase of intellectual property rights relating to the Penn State
Heart program and the related warrant agreements. In June 2007, the Arbitrator issued his ruling and in his award the Arbitrator found that,
during the period between July 2003 and September 2004, the Company terminated all material staffing and funding for development of the
Penn State Heart program for a continuous period of three months, other than for reasons outside of the Company’s control, which constituted
a “cancellation” under the terms of the warrant agreement. In addition, the Arbitrator issued his ruling that certain holders of the warrants
covered by the warrant agreement were entitled to exercise their warrants to purchase 143,496.50 shares of the Company’s common stock for
$0.01 per share pursuant to the warrant agreement and that the Company should pay to the claimants $0.5 million representing reimbursement
for legal and arbitration fees and other disbursements.

During the year ended March 31, 2008, the Company expensed $1.2 million for the aggregate arbitrator award, comprised of $0.5 million
representing reimbursement for legal and arbitration fees and other disbursements and $0.7 million related to the fair value of the warrants not
previously expensed by the Company, which is reflected in the accompanying statements of operations under the line item arbitration
decision. Also during the year ended March 31, 2008, the Company repurchased all outstanding warrants as described in the below paragraph.

Warrants Repurchase

During the three months ended December 31, 2007, the Company repurchased all outstanding warrants held by the claimants discussed above
in the Arbitration Decision section for cash consideration of approximately $2.2 million in settlement of any remaining claims held by the
selling stockholders related to the Company’s acquisition of the Penn State Heart. In exchange for the cash consideration, the warrants were
cancelled and the claimants released the Company from any future obligations or liabilities related to this matter. Management’s estimate of
the fair value of the warrants repurchased was approximately $1.9 million. This was calculated as 143,496.50 warrants discussed above,
valued at the price of the Company’s stock per share of $13.02, which was the price on the close of business on October 3, 2007, the effective
date of the settlement. The excess of the $2.2 million of cash consideration over the $1.9 million estimated fair value of the warrants at
October 3, 2007 was recorded as selling, general and administrative expense in the statements of operations during fiscal 2008. There will be
no other future royalties or payouts owed to the selling stockholders on revenue generated from the AbioCor II under the terms of the
agreement.

F-15

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 12. Stock Award Plans and Stock Based Compensation

Stock Option Plans

Virtually all outstanding stock options of the Company as of March 31, 2009 were granted with an exercise price equal to the fair market
value on the date of grant. For options and restricted stock granted below fair market value, compensation expense is recognized ratably over
the vesting period. Outstanding stock options, if not exercised, expire 10 years from the date of grant.

In August 2008, the Company’s stockholders approved the Company’s 2008 Stock Incentive Plan (the “Plan”). The Plan authorizes the grant
of a variety of equity awards to the Company’s officers, directors, employees, consultants and advisers, including awards of unrestricted and
restricted stock, incentive and nonqualified stock options to purchase shares of common stock, performance share awards and stock
appreciation rights. The Plan provides that options may only be granted at the current market value on the date of grant. The maximum
number of shares of the Company’s common stock issuable under the Plan is equal to 2,308,688 shares, which included 308,688 shares that
remained available for future awards as of August 12, 2008 under the Company’s 1989 Non-Qualified Stock Option Plan for Non-Employee
Directors, the 1998 Equity Incentive Plan and 2000 Stock Incentive Plan. This amount may be increased by up to 4,191,312 shares to the
extent that any stock options or other equity awards that have been issued under the other plans are forfeited or terminated after August 13,
2008. Each share of stock issued pursuant to a stock option or stock appreciation right counts as one share against the maximum number of
shares issuable under the Plan, while each share of stock issued pursuant to any other type of award counts as 1.5 shares against the maximum
number of shares issuable under the Plan. At March 31, 2009, a total of 1,534,950 shares were available for future issuance under the Plan.

Total stock-based compensation recognized in the Company’s consolidated statements of operations for the fiscal years ended March 31,
2009, 2008, and 2007 were as follows:

Cost of product revenue

Research and development

Selling, general and administrative

March 31,

2009

2008

2007

(in $000’s)
$ 301

1,297

3,778

$ 255

1,656

3,937

$ 377

1,808

6,649

$8,834

$5,376

$5,848

The stock-based compensation expense for the year ended March 31, 2009 includes $4.8 million related to stock options and $4.0 million
related to restricted stock and the Company’s Employee Stock Purchase Plan (“the Purchase Plan” or “ESPP”). The stock-based compensation
expense for the year ended March 31, 2008 includes $5.0 million related to stock options and $0.4 million related to restricted stock and the
Company’s Employee Stock Purchase Plan. The stock-based compensation expense for the year ended March 31, 2007 includes $5.6 million
related to stock options and $0.2 million related to restricted stock and the Company’s Employee Stock Purchase Plan.

The remaining unrecognized stock-based compensation expense for unvested stock option awards at March 31, 2009 was $8.7 million, net of
forfeitures, and the weighted-average time over which this cost will be recognized is 1.3 years. SFAS No. 123(R) also requires the benefits of
tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow.
Because the Company does not recognize the benefit of tax deductions in excess of recognized compensation cost due to its net operating loss
position, this had no impact on the Company’s consolidated statement of cash flows for the year ended March 31, 2009.

F-16

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 12. Stock Award Plans and Stock Based Compensation (Continued)

Stock Option Activity

The following table summarized stock option activity for the year ended March 31, 2009:

Outstanding at beginning of year

Granted

Exercised

Cancelled

Expired

Outstanding at end of year

Exercisable at end of year

Options vested and expected to vest at end of year

Options
(in thousands)

Weighted
Average
Exercise Price

4,436

907

(555)

(203)

(2)

4,583

2,713

4,488

$11.49

14.34

8.82

12.80

5.63

$12.32

$11.59

$12.28

Weighted
Average
Remaining
Contractual
Term (years)

6.65

Aggregate Intrinsic
Value
(in thousands)

6.57

5.30

$20

The total intrinsic value of options exercised for the fiscal years 2009, 2008, and 2007 was $4.3 million, $1.7 million, and $2.0 million,
respectively. The total cash received from employees as a result of employee stock option exercises during the years ended March 31, 2009,
2008, and 2007 was approximately $4.7 million, $2.8 million, and $2.8 million, respectively. The total fair value of options vested in fiscal
years 2009, 2008, and 2007 was $6.6 million, $6.4 million, and $5.3 million, respectively.

The Company estimates the fair value of each stock option granted at the grant date using the Black-Scholes option valuation model. The fair
value of options granted during the years ended March 31, 2009, 2008 and 2007 were calculated using the following weighted average
assumptions:

Risk-free interest rate
Expected life (years)
Expected volatility

2009

2008

2007

2.77% 4.38% 4.97%
5.93
5.10
50.4% 56.6% 65.0%

6.25

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 average expected term was estimated using the
simplified method for stock option grants before January 1, 2008 as prescribed by the SEC’s Staff Accounting Bulletin No. 107, Share-Based
Payment. Beginning January 1, 2008, the Company estimates the expected term based on historical experience.

The calculation of the fair value of the options is net of estimated forfeitures. Forfeitures are estimated based on an analysis of actual option
forfeitures, adjusted to the extent historic forfeitures may not be indicative of forfeitures in the future. In addition, 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 weighted average grant-date fair value for options granted during years ended March 31, 2009, 2008, and 2007 was $6.71, $7.26, and
$8.75 per share, respectively.

F-17

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 12. Stock Award Plans and Stock Based Compensation (Continued)

Restricted Stock

The following table summarizes restricted stock activity for the fiscal year ended March 31, 2009:

Restricted stock awards at March 31, 2008

Granted

Vested

Forfeited

Restricted stock awards at March 31, 2009

March 31, 2009

Number of Shares
(in thousands)

Grant Date
Fair Value

666

(167)

(73)

480

$11.52

16.75

14.65

17.53

$16.77

The remaining unrecognized compensation expense for restricted stock awards at March 31, 2009 was $4.6 million. The weighted average
remaining contractual life for restricted stock awards at March 31, 2009 and 2008 was 1.8 and 2.4 years, respectively.

In May 2008, 260,001 shares of restricted stock were issued to certain executive officers and certain members of senior management of the
Company, of which 130,002 of these shares vest upon achievement of a prescribed performance milestone. In September 2008, the Company
met the prescribed performance milestone, and all of these performance-based shares vested. In connection with the vesting of these shares,
these employees paid withholding taxes due by returning 39,935 shares valued at $0.7 million. These shares have been recorded as treasury
stock as of March 31, 2009. The remaining 129,999 of the restricted shares award vest ratably over four years from the grant date. The stock
compensation expense for the restricted stock awards is recognized on a straight-line basis over the vesting period, based on the probability of
achieving the performance milestones.

In August 2008, 406,250 shares of restricted stock were issued to certain executive officers and certain members of senior management of the
Company, all of which could vest upon achievement of certain prescribed performance milestones. In March 2009, the Company met a
prescribed performance milestone, and a portion of these performance-based shares vested. The remaining stock compensation expense for
the restricted stock awards is being recognized on a straight-line basis over the vesting period through March 31, 2011 based on the
probability of achieving the performance milestones. The cumulative effects of changes in the probability of achieving the milestones will be
recorded in the period in which the changes occur.

During the year ended March 31, 2008, 60,000 shares of restricted stock were issued to certain executive officers of the Company that vest on
the third anniversary of the date of grant. The stock compensation expense for the restricted stock awards is recognized on a straight-line basis
over the vesting period.

Employee Stock Purchase Plan

In March 1988, the Company adopted the 1988 Employee Stock Purchase Plan (“the Purchase Plan” or “ESPP”), as amended. Under the
Purchase Plan, eligible employees, including officers and directors, who have completed three months of employment with the Company or
its subsidiaries who elect to participate in the Purchase plan instruct the Company to withhold a specified amount from each payroll period
during a six-month payment period (the periods April 1—September 30 and October 1—March 31). On the last business day of each payment
period, the amount withheld is used to purchase common stock at an exercise price equal to 85% of the lower of its market price on the first
business day or the last business day of the payment period. Up to 500,000 shares of common stock may be issued under the Purchase Plan, of
which 163,245 shares are available for future issuance as of March 31, 2009. During the years ended March 31, 2009, 2008 and 2007, 45,823,
23,930, and 27,095 shares of common stock, respectively, were sold pursuant to the Purchase Plan.

F-18

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 12. Stock Award Plans and Stock Based Compensation (Continued)

Compensation expense recognized related to the Company’s ESPP was approximately $0.1 million for each of the years ended March 31,
2009, 2008 and 2007 respectively. The fair value of shares issued under the employee stock purchase plan was estimated on the
commencement date of each offering period using the Black-Scholes option-pricing model with the following assumptions:

Risk-free interest rate
Expected life (years)
Expected volatility

Note 13. Capital Stock

2009

2008

2007

1.01% 4.61% 4.84%
0.5
0.5
67.2% 45.2% 39.8%

0.5

In August 2008, the Company issued 2,419,932 shares of its common stock at a price of $17.3788 in a public offering, which resulted in net
proceeds to the Company of approximately $42.0 million, after deducting offering expenses.

In March 2007, the Company issued 5,000,000 shares of common stock in a public offering, and in April 2007, an additional 80,068 shares of
common stock were issued in connection with the offering upon the partial exercise of the underwriters’ over-allotment option.

The Company has authorized 1,000,000 shares of Class B Preferred Stock, $0.01 par value, of which the Board of Directors can set the
designation, rights and privileges. No shares of Class B Preferred Stock have been issued or are outstanding.

Note 14. Income Taxes

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to tax benefit carryforwards and to
differences between the financial statement amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities
are measured using enacted tax rates. A valuation reserve is established if it is more likely than not that all or a portion of the deferred tax
asset will not be realized. The tax benefit associated with the stock option compensation deductions will be credited to equity when realized.

At March 31, 2009, the Company had federal and state net operating loss carryforwards, or NOLs, of approximately $145.1 million and $97.1
million, respectively, which begin to expire in fiscal 2010. Additionally, at March 31, 2009, the Company had federal and state research and
development credit carryforwards of approximately $8.1 million and $4.2 million, respectively, which begin to expire in fiscal 2010. The
Company acquired Impella, a German-based company, in May 2005. Impella had pre-acquisition net operating losses of approximately $18.2
million at the time of acquisition (which is denominated in Euros and is subject to foreign exchange remeasurement at each balance sheet date
presented), and has since incurred net operating losses in each fiscal year since the acquisition. During fiscal 2008, the Company determined
that approximately $1.2 million of pre-acquisition operating losses could not be utilized. The utilization of pre-acquisition net operating losses
of Impella in future periods is subject to certain statutory approvals and business requirements.

Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets, a full valuation allowance
has been established to offset the Company’s net deferred tax assets and liabilities. Additionally, the future utilization of the Company’s NOL
and research and development credit carry forwards to offset future taxable income may be subject to a substantial annual limitation under
Section 382 of the Internal Revenue Code due to ownership changes that have occurred previously or that could occur in the future.
Ownership changes, as defined in Section 382 of the Internal Revenue Code, can limit the amount of net operating loss carry forwards and
research and development credit carry forwards that a company can use each year to offset future taxable income and taxes payable. The
Company believes that all of its federal and state NOL’s will be available for carryforward to future tax periods, subject to the statutory
maximum carryforward limitation of any annual NOL. Any future potential limitation to all or a portion of the NOL or research and
development credit carry forwards, before they can be utilized, would reduce the Company’s gross deferred tax assets. The Company will
monitor subsequent ownership changes, which could impose limitations in the future.

F-19

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 14. Income Taxes (Continued)

Loss before provision for income taxes is as follows for the years ended March 31:

Loss before provision for income taxes:

United States

Foreign

Loss before income taxes

Provision for income taxes:

Current:

Federal

State

Foreign

Total current

Deferred:

Federal

State

Foreign

Total deferred

Total tax provision

2009

2008

2007

(in $000’s)

$(20,672) $(26,074) $(15,660)

(10,173)

(14,329)

(11,746)

$(30,845) $(40,403) $(27,406)

$ — $ — $ —

—

612

108

—

720

(53)

—

(53)

493

—

580

752

527

—

404

—

475

Differences between the federal statutory income tax rate and the effective tax rates for the years ended March 31, 2009, 2008 and 2007 are as
follows:

Statutory income tax rate

Increase (decrease) resulting from:

Change in valuation allowance

Credits

Rate differential on foreign operations

Stock based compensation

Other, net

Effective tax rate

2009

2008

2007

34.0% 34.0% 34.0%

(41.2)% (39.9)% (42.5)%

8.6

(1.9)

(1.5)

(0.4)

1.2

3.1

0.9

2.7

2.3

2.2

(0.6)

(0.4)

(2.4)% (1.3)% (1.7)%

F-20

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 14. Income Taxes (Continued)

The components of the Company’s net deferred taxes were as follows as of March 31:

Assets

NOL carryforwards and tax credit carryforwards

Foreign NOL carryforwards

Stock-based compensation

Nondeductible reserves and accruals

Deferred revenue

Depreciation

Amortizable intangibles other than goodwill

Unrealized losses

Other, net

Capitalized research and development

Liabilities

Identified intangibles

Indefinite lived intangible

Cumulative foreign currency translation loss

Net deferred tax asset

Valuation allowance

Net deferred taxes

March 31,

2009

2008

(in $000’s)

$ 67,564

$ 43,212

5,621

6,079

1,243

484

616

5,089

2,442

1,377

7,177

4,419

814

439

584

5,210

2,355

1,121

20,131

33,580

110,646

98,911

(1,693)

(2,086)

—

(2,662)

(1,365)

(3,375)

(3,779)

(7,402)

106,867

91,509

(108,953)

(96,249)

(2,086) $ (4,740)

The change in the valuation allowance was $12.7 million and $16.1 million for fiscal 2009 and 2008, respectively, and was primarily due to
the impact of the annual operating losses without current tax benefit.

Management has determined that the Company is not likely to realize the income tax benefit of its net deferred tax assets. To the extent the
Company generates income in future years, the tax provision will reflect the realization of such benefits.

As a result of the adoption of SFAS No. 142, Goodwill and Other Intangible Assets and the fiscal year 2006 acquisition of Impella, the
Company has recorded a valuation allowance in excess of its net deferred tax assets to the extent the difference between the book and tax
basis of indefinite lived intangible assets is not expected to reverse during the net operating loss carryforward period.

As of March 31, 2009, the Company has accumulated a net deferred tax liability of $2.1 million which is the result of the difference in
accounting for the Company’s goodwill, which is amortizable over 15 years for tax purposes but not amortized for book purposes. The net
deferred tax liability cannot be offset against the Company’s deferred tax assets since it relates to an indefinite-lived asset and is not
anticipated to reverse in the same period.

F-21

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 14. Income Taxes (Continued)

On April 1, 2007, the Company adopted Financial Interpretation FIN No. 48, Accounting for Uncertainty in Income Taxes—an interpretation
of FASB Statement No. 109 (“FIN No. 48”), which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s
financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN No. 48 prescribes a recognition
threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax
return. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure,
and transition and defines the criteria that must be met for the benefits of a tax position to be recognized. As a result of its adoption of FIN
No. 48, the Company recorded the cumulative effect of the change in accounting principle of $0.3 million as a decrease to opening retained
earnings and an increase to other long-term liabilities as of April 1, 2007. This adjustment related to state nexus for failure to file tax returns in
various states for the years ended March 31, 2003, 2004, and 2005. The Company initiated a voluntary disclosure plan, which it completed in
fiscal year 2009. The Company elected to recognize interest and/or penalties related to income tax matters in income tax expense in its
consolidated statements of operations. As of March 31, 2009, the Company had remitted all outstanding amounts owed to each of the states in
connection with the outstanding taxes owed at March 31, 2008. As such, the Company had no FIN No. 48 liability at March 31, 2009.

On a quarterly basis, the Company accrues for the effects of uncertain tax positions and the related potential penalties and interest. It is
reasonably possible that the amount of the unrecognized tax benefit with respect to certain of the unrecognized tax positions will increase or
decrease during the next 12 months; however, it is not expected that the change will have a significant effect on the Company’s results of
operations or financial position.

A reconciliation of the beginning and ending balance of unrecognized tax benefits, excluding accrued interest recorded at March 31, 2009 (in
thousands) is as follows:

Balance at March 31, 2008
Reductions for tax positions for closing of the applicable statute of limitations

Balance at March 31, 2009

$ 168
(168)

$ —

The Company and its subsidiaries are subject to U.S. federal income tax, as well as income tax of multiple state and foreign jurisdictions. The
Company has accumulated significant losses since its inception in 1981. All tax years remain subject to examination by major tax
jurisdictions, including the federal government and the Commonwealth of Massachusetts. However, since the Company has net operating loss
and tax credit carry forwards 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 carry forwards are utilized.

Note 15. Commitments and Contingencies

The Company’s acquisition of Impella provided that Abiomed was required to make contingent payments to Impella’s former shareholders as
follows:

•

upon FDA approval of the Impella 2.5 device, a payment of $5,583,333

upon FDA approval of the Impella 5.0 device, a payment of $5,583,333, and

upon the sale of 1,000 units of Impella’s products worldwide, a payment of $5,583,334.

The two milestones related to sales and FDA approval of the Impella 2.5 device were achieved and paid prior to March 31, 2009.

In April 2009, the Company received FDA 510(k) clearance of its Impella 5.0 product, triggering an obligation to pay the milestone related to
the Impella 5.0 device. In May 2009, the Company paid $1.8 million of this final milestone in cash and elected to pay the remaining amount
through the issuance of approximately 664,612 shares of common stock.

F-22

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 15. Commitments and Contingencies (continued)

The Company applies the disclosure provisions of FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees,
Including Guarantees of Indebtedness of Others, and Interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB
Interpretation No. 34 (FIN No. 45) to its agreements that contain guarantee or indemnification clauses. These disclosure provisions expand
those required by SFAS No. 5, Accounting for Contingencies, by requiring that guarantors disclose certain types of guarantees, even if the
likelihood of requiring the guarantor’s performance is remote. In addition to product warranties, the following is a description of arrangements
in which the Company is a guarantor.

Indemnifications—In many sales transactions, the Company indemnifies customers against possible claims of patent infringement caused by
the Company’s products. The indemnifications contained within sales contracts usually do not include limits on the claims. The Company has
never incurred any material costs to defend lawsuits or settle patent infringement claims related to sales transactions. Under the provisions of
FIN No. 45, intellectual property indemnifications require disclosure only.

The Company enters into agreements with other companies in the ordinary course of business, typically with underwriters, contractors,
clinical sites and customers that include indemnification provisions. Under these provisions the Company generally indemnifies and holds
harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of its activities. These indemnification
provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could
be required to make under these indemnification provisions is unlimited. Abiomed has never incurred any material costs to defend lawsuits or
settle claims related to these indemnification agreements. As a result, the estimated fair value of these agreements is minimal. Accordingly,
the Company has no liabilities recorded for these agreements as of March 31, 2009.

Clinical study agreements—In the Company’s clinical study agreements, Abiomed has agreed to indemnify the participating institutions
against losses incurred by them for claims related to any personal injury of subjects taking part in the study to the extent they relate to uses of
the Company’s devices in accordance with the clinical study agreement, the protocol for the device and Abiomed’s instructions. The
indemnification provisions contained within the Company’s clinical study agreements do not generally include limits on the claims. The
Company has never incurred any material costs related to the indemnification provisions contained in its clinical study agreements.

Facilities Leases—The Company’s lease for its Aachen location expires in December 2012. The monthly rent due under the lease agreement
and payable monthly is 51,646€ (Euro) (approximately U.S. $69,000) per month or 619,572€ (Euro) (approximately U.S. $828,000) per year.
In June 2008, the Company amended the lease for its Danvers, Massachusetts facility. The amendment extended the lease from February 28,
2010 to February 28, 2016. The lease continues to be accounted for as an operating lease. The amendment changed the rent payments under
the lease from $64,350 per month to the following schedule:

•

The base rent for July 2008 through October 2008 was $0 per month;

The base rent for November 2008 through June 2010 is $40,000 per month;

The base rent for July 2010 through February 2014 will be $64,350 per month; and

The base rent for March 2014 through February 2016 will be $66,000 per month.

In addition, 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 amendment.

In July 2008, the Company entered into a lease agreement providing for the lease of a 33,000 square foot manufacturing facility in Athlone,
Ireland. The lease agreement is for a term of 25 years and one week, commencing on April 18, 2008. The monthly rent due under the lease
agreement and payable monthly is 22,455€ (Euro) (approximately U.S. $30,000) per month or 269,464€ (Euro) (approximately U.S.
$360,000) per year for the first five years of the lease, through April 17, 2013. On April 18, 2013 and each fifth anniversary thereafter, the
rental rate will be set to a current market rate, as determined by the procedures set forth in the lease agreement. The Company has the right to
terminate the lease after five years, subject to the payment of a termination fee equal to 18 months rent, and the right to terminate the lease
after 10 years, subject to the payment of a termination fee equal to six months of the then current rent.

Total rent expense for the Company’s operating leases, included in the accompanying consolidated statements of operations approximated
$2.4 million, $2.2 million, and $1.6 million, for the fiscal years ended March 31, 2009, 2008 and 2007, respectively.

F-23

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 15. Commitments and Contingencies (continued)

Future minimum lease payments under all significant non-cancelable operating leases as of March 31, 2009 are approximately as follows:

Fiscal Year Ending March 31,

2010
2011
2012
2013
2014
Thereafter

Total future minimum lease payments

Operating
Leases

(in $000s)

$ 2,313
2,275
1,992
1,784
808
1,518

$10,690

Litigation—From time to time, the Company is involved in legal and administrative proceedings and claims of various types. While any
litigation contains an element of uncertainty, management presently believes that the outcome of each such other proceedings or claims which
are pending or known to be threatened, or all of them combined, is not expected to have a material adverse effect on the Company’s financial
position, cash flow and results. At March 31, 2009, the Company did not have any pending litigation.

Note 16. Research and Development

Research and development is a significant portion of the Company’s operations. The Company’s research and development efforts are
focused on the development of new products related to cardiac assist, recovery and heart replacement and to continually enhance and improve
its existing products. Research and development costs are expensed when incurred and include direct materials and labor, depreciation,
contracted services and other costs associated with developing new products and significant enhancements to existing products. Research and
development expense for the fiscal years ended March 31, 2009, 2008 and 2007 are reflected below:

Internally funded
Incurred under government contracts and grants

Note 17. 401(k) Plan

March 31,

2009

2008

2007

$24,849
479

(in $000’s)

$24,588
329

$22,123
169

$25,328

$24,917

$22,292

The Company has a 401(k) Plan that covers all employees who are at least 20 years of age. Amounts paid by the Company to match a portion
of employees’ contributions and discretionary amounts determined by the Company’s Board of Directors totaled $0.2 million, $0.3 million
and $0.2 million for the fiscal years ended March 31, 2009, 2008, and 2007, respectively.

F-24

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 18. Accrued Expenses

Accrued expenses consisted of the following:

Salaries and benefits
Research and development
Professional, accounting and auditing fees
Warranty
Other

March 31,

2009

2008

(in $000’s)

$ 5,710
2,727
600
392
1,389

$6,443
1,316
735
214
582

$10,818

$9,290

Note 19. 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 62% and 54% of the Company’s total consolidated assets are located within the U.S. as of March 31, 2009
and 2008, respectively. Remaining assets are located in Europe, primarily related to the Company’s Impella production facility, and include
goodwill and intangibles of $35.5 and $38.2 million at March 31, 2009 and 2008, respectively, associated with the Impella acquisition from
May 2005. Total assets in Europe excluding goodwill and intangibles amounted to 11% and 14% of total consolidated assets at March 31,
2009 and 2008, respectively. International sales (sales outside the U.S. and primarily in Europe) accounted for 14%, 17%, and 11% of total
product revenue during the fiscal years ended March 31, 2009, 2008, and 2007, respectively.

F-25

ABIOMED, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued)

Note 20. Quarterly Results of Operation (Unaudited)

The following is a summary of the Company’s unaudited quarterly results of operations for the fiscal years ending March 31, 2009 and 2008.

Fiscal Year 2009

Total revenues

Cost of product revenue excluding amortization of intangibles

Other operating expenses

Other income (expense), net

Loss before provision for income taxes

Provision for income taxes

Net loss

Fiscal Years Ended March 31,

1st
Quarter

2nd
Quarter

3rd
Quarter

4th
Quarter

Total
Year

$ 16,357

$ 19,999

$ 17,271

$ 19,583

$ 73,210

5,627

20,084

385

4,793

21,159

4,519

18,792

5,498

22,256

20,437

82,291

(104)

(1,477)

(131)

(1,327)

(8,969)

(6,057)

(7,517)

(8,302)

(30,845)

145

273

182

152

752

$ (9,114) $ (6,330) $ (7,699) $ (8,454) $ (31,597)

Basic and diluted net loss per share

(0.28) $

(0.18) $

(0.21) $

(0.23) $

(0.91)

Fiscal Year 2008

Total revenues

Cost of product revenue excluding amortization of intangibles

Other operating expenses

Other income, net (1)

$ 14,063

$ 11,355

$ 16,015

$ 17,508

$ 58,941

3,532

19,569

908

2,877

18,449

734

3,773

20,826

4,883

21,519

15,065

80,363

450

(6,008)

(3,916)

Loss before provision for income taxes

(8,130)

(9,237)

(8,134)

(14,902)

(40,403)

Provision for income taxes

Net loss

145

167

527

$ (8,275) $ (9,382) $ (8,301) $ (14,972) $ (40,930)

Basic and diluted net loss per share

(0.26) $

(0.29) $

(0.26) $

(0.46) $

(1.26)

(1) Other income, net, includes an impairment charge of $5.6 million during the fourth quarter of fiscal 2008 related to the Company’s note
receivable from WorldHeart, which includes the $5.0 million write-off of the note receivable and a $0.6 million reversal of a previously
recognized gain on the WorldHeart derivative instruments.

F-26

ABIOMED, INC. AND SUBSIDIARIES

SCHEDULE II

Valuation and Qualifying Accounts
(in thousands)

Description

Allowance for Doubtful Accounts

Fiscal Year Ended March 31, 2007

Fiscal Year Ended March 31, 2008

Fiscal Year Ended March 31, 2009

Balance at
Beginning of
Period

Additions Deductions

Balance at
End of
Period

$ 211

$ 203

$ 153

$ 106

$ 173

$ 384

$ 114

$ 223

$ 353

$ 203

$ 153

$ 184

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