Impella Pumps Up Abiomed

Leading cardiac assist devices maker Abiomed’s (ABMD - Analyst Report) second-quarter fiscal 2012 adjusted (excluding one-time items other than stock-based compensation expenses) earnings per share of 3 cents outperformed the Zacks Consensus Estimate of a loss of 8 cents as the company saw robust sales for its popular Impella cardiac pumps.

On a reported basis, Abiomed turned in a profit in the quarter riding on record sales. The company posted a profit of $0.6 million (or 2 cents a share) versus a loss of $3.2 million (or 9 cents a share). The overwhelming results pushed up the Massachusetts-based company’s shares by as much as 22.5%.

Revenues & Margins

Revenues shot up 26% year over year to $29.5 million, powered by solid sales of Impella pumps (including Impella 2.5 and 5.0), which are used for the support of acute pre-shock patients or for prophylactic support of patients undergoing high-risk percutaneous coronary intervention. Sales topped the Zacks Consensus Estimate of $28 million. Revenues in the U.S. and overseas markets soared 25% and 38%, respectively.

Globally, Impella revenues zoomed 40% year over year to $24.8 million. U.S. Impella sales surged 41% to $23.1 million. Abiomed opened 22 new U.S. Impella 2.5 sites in the second quarter (versus 27 sites a year ago) to end the quarter with 568 customer sites.

Gross margin expanded to 81% from 77% a year ago on strong revenues. Operating expenses climbed roughly 9% year over year to $28.7 million, in part, due to sustained marketing activities associated with Impella.

Balance Sheet

Abiomed exited the quarter with cash equivalents and short-term marketable securities of $60.8 million, up 3% sequentially, with no debt.

Guidance Retained

Abiomed has once again backed its revenue guidance for fiscal 2012 which is still expected in the range of $120 million to $125 million, a 20%-24% year-over-year growth. The current corresponding Zacks Consensus Estimate is $123 million.

Abiomed is enjoying strong demand for its Impella products. Impella utilization continues to grow at a healthy pace as borne out by the increasing number of patients being treated with the device.

Moreover, multiple clinical data updates (including additional data from the Protect II study) on Impella through the remainder of fiscal 2012 may support the device’s utilization. The company expects to reveal new data from the Protect II trial at the Transcatheter Cardiovascular Therapeutics (“TCT”) conference scheduled to be held in San Francisco on November 7-11, 2011.

However, Abiomed operates in an intensely competitive environment and faces significant reimbursement risk. The company faces competition from organizations developing permanent heart assist products including Thoratec Corporation (THOR - Analyst Report). Currently, we have a Neutral recommendation on the stock.

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