Heart devices maker, Abiomed
(ABMD - Analyst Report
) has entered into a five-year contract with the U.S. Department of Veteran Affairs to supply Impella products through its authorized Veteran's Administration (VA) Federal Supply Schedule. The contract will run till Aug 2018.
As per the agreement, the Impella platform will be available in an automated online database, thereby making accessibility to the technology much quicker and easier. Abiomed will be able to supply the Impella platform to roughly 169 VA facilities, 46 Department of Defense hospitals and other federal agencies in the U.S. via the online portal. Moreover, management remains committed to serving the nation’s military veterans through the Medical Technology Veterans program.
According to a study by the Centers for Disease Control and Prevention (CDC), veterans are at higher risk of suffering from two or more chronic ailments such as diabetes, heart disease, and high blood pressure. We believe that the long-term contract with the VA hospitals and federal agencies should significantly boost Impella sales going forward. Management forecasts revenues to grow 14%–17% to $180 million–$185 million in fiscal 2014. Global Impella sales are expected to increase by 20%.
Mass.-based Abiomed is a medical device company with a blue streak growth path. Given its unique technology, Abiomed enjoys strong demand for its Impella products. Both the Impella CP and RP are considered future growth drivers for the company. Recently, the company revealed that physicians across the U.S. have implanted more than 15,000 Impella pumps in patients needing hemodynamic support.
ABMD opened 27 new U.S. sites for Impella 2.5 in the last reported quarter to end with 775 customer sites. Moreover, 66 new hospitals adopted the latest Impella CP, with 172 customer sites in the U.S. The device has also been implanted in more than 1,000 patients globally.
However, the company’s engagement in a number of legal issues is leading to higher expenses and resulting in net loss. This has also driven management to lower its operating margin guidance, which is a risk to the bottom line.
ABMD has a Zacks Rank #3 (Hold). Medical stocks that are worth considering include Luminex
(LMNX - Analyst Report
), Given Imaging
(CYBX - Analyst Report
). All these stocks carry a Zacks Rank #2 (Buy).