Back to top

Analyst Blog

Abiomed Inc.’s (ABMD - Analyst Report) fourth-quarter fiscal 2013 earnings per share (EPS) of 9 cents beat the Zacks Consensus Estimate of 7 cents by 28.6%. The Massachusetts.-based company registered a solid profit of $3.7 million, up 42.3% year over year.

For fiscal 2013, the leading cardiac assist devices maker posted an EPS of 37 cents, which surpassed the Zacks Consensus Estimate of 34 cents. Profit jumped ten times year over year to $15 million on the back of excellent operating performance as well as strong end-market demand for percutaneous hemodynamic support.

Revenues
 
Revenues for the fourth quarter climbed 17% year over year to $43.7 million, beating the Zacks Consensus Estimate of $42 million. This marked the 14th straight quarter, in which Abiomed recorded year-over-year double-digit growth. Growth was led by record sales of the Impella heart pumps and patient utilization of the Impella device in the quarter.
 
Globally, Impella sales soared 22% year over year to $39.3 million in the fiscal fourth quarter. U.S. Impella sales grew 22% to $36.5 million. Abiomed opened 30 new U.S. sites for Impella 2.5 in the quarter to end with a total of 748 customer sites.

For fiscal 2013, the company’s revenues of $158.1 million also exceeded the Zacks Consensus Estimate of $156 million by 1.3%. Revenues grew 25% year over year, which was above the company’s guidance of 23%–24% growth for fiscal 2013 in the range of $155 – $157 million.
 
Margins
 
Gross margin declined to 79.8% from 81.8% a year ago. However, operating margin was 9.5% compared with 7.9% in the prior-year quarter.
 
Selling, general and administrative expenses were at 54.7% of sales versus 53.6% in the year-ago quarter. Research and Development expenses, as a percentage of sales, fell to 15.6% from 19.3%.
 
Balance Sheet
 
Abiomed exited the quarter with cash, cash equivalents and short-term marketable securities of $88.1 million, 14.1% higher than the previous year. The company had no debt in the quarter.

The company repurchased 0.3 million shares in the quarter for $4.4 million to complete its repurchase program to buyback up to $15 million of its common stock.

Guidance
 
Abiomed provided revenue guidance for fiscal 2014. Abiomed forecasts revenues to grow 14%–17% to $180 – $185 million. Global Impella sales are expected to increase by 20%.

Moreover, operating margin is forecast in the band of 7% and 8%, including legal expenses of $6 million-$8 million associated with the Department of Justice and shareholder matters.
 
Recent Developments

In Feb 2013, Abiomed announced that the Food and Drug Administration (FDA) has closed out a warning letter issued in Jun 2011 concerning irregular marketing practices of the Impella heart pump.

Abiomed also revealed quite a number of reimbursement milestones in the quarter, including Impella coverage decisions from Humana, UnitedHealthcare, Independence Blue Cross and Capital BlueCross.

Moreover, Abiomed commenced its Recovery Right Investigational Device Exemption (IDE) study to gather information on the safety and efficacy of the Impella RP (Right Peripheral) device in April. The Impella RP device will be implanted in 30 patients with right side heart failure and are being treated in the catheterization lab or cardiac surgery suite and will be monitored for the next 2 years.  

Additionally, there were two new publications regarding Abiomed’s novel devices in the quarter. One was an economic study on the percutaneous ventricular assist devices (pVAD), published in The Journal of Managed Care Medicine (JMCM). The other was regarding the Protect II study, which was published in the American Health and Drug Benefits Journal.

Our Take

Mass.-based Abiomed is engaged in developing, manufacturing and marketing of medical products designed to assist or replace the pumping function of the failing heart. Abiomed enjoys a strong demand for its Impella products. Impella utilization continues to grow at a healthy pace, as is evident from the increasing number of patients being treated with the device.

The company has a Zacks Rank #2 (Buy). Other medical stocks such as Accuray (ARAY - Analyst Report), Intuitive Surgical (ISRG - Analyst Report) and Mindray Medical International (MR - Analyst Report) with a Zacks Rank #2 (Buy) appear impressive.

Please login to Zacks.com or register to post a comment.