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Basis of Preparation and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Sep. 30, 2021

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

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

of medical attention that requires the use of the Company’s products, it is difficult to predict when or if those patients may ultimately seek treatment, and therefore, the extent to which COVID-19 may impact patient utilization and, consequently, product revenue.

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

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

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Simplifying the Accounting for Income Taxes (ASC 740). The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740, including requirements related to hybrid tax regimes, the tax basis step-up in goodwill obtained in a transaction that is not a business combination, separate financial statements of entities not subject to tax, the intra-period tax allocation exception to the incremental approach, ownership changes in investments, changes from a subsidiary to an equity method investment, interim-period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim-period tax accounting. This guidance is effective for the Company for annual and interim periods beginning after December 31, 2020; however, early adoption is permitted. The Company adopted this standard as of April 1, 2021 on a prospective basis. The adoption did not have a material impact on the Company’s condensed consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, “Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815),” an amendment clarifying the interaction between accounting standards related to equity securities, equity method investments, and certain derivative instruments. The guidance is effective for fiscal years beginning after December 15, 2020. The Company adopted this standard as of April 1, 2021 and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Effective

No other new accounting pronouncements, issued or effective, during the period had, or are expected to have, a material impact on the condensed consolidated financial statements.

Leases

Lessee

The following table presents supplemental balance sheet information related to the Company’s operating leases:

	September 30, 2021		March 31, 2021
	(in thousands)
Assets
Operating lease right-of-use assets in other assets	$	5,099	$	6,109
Liabilities
Operating lease liabilities in other current liabilities		1,785		2,459
Operating lease liabilities in other long-term liabilities		3,302		3,657
Total operating lease liabilities	$	5,087	$	6,116

Expense charged to operations under operating leases was $4.0 million and $5.7 million for the three and six months ended September 30, 2021, respectively. Expense charged to operations under operating leases was $1.1 million and $2.2 million for the three and six months ended September 30, 2020, respectively.

Future minimum lease payments under non-cancelable operating leases as of September 30, 2021 are as follows:

(in thousands, except lease term and discount rate)

Fiscal Years Ending March 31,
2022 (excluding the 6 months ended September 30, 2021)	$	1,043
2023		1,638
2024		1,397
2025		653
2026		75
Thereafter		575
Total future minimum lease payments		5,381
Less: present value adjustment		(294	)
Total operating lease liabilities		5,087
Less: operating lease liabilities in other current liabilities		(1,785	)
Operating lease liabilities in other long-term liabilities	$	3,302

Weighted average remaining lease term	4.55

Weighted average discount rate		2.32	%

Lessor

In March 2021, as part of the $17.5 million purchase of a building located in Danvers, Massachusetts, we assumed existing leases with third parties for a portion of the building which are classified as operating leases. The leases have annual escalating payments and the latest expires in March 2025 in accordance with the terms and conditions of the existing agreement. For the six months ended September 30, 2021, operating lease income was not material.