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Insulet (PODD) Up 0.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Insulet (PODD - Free Report) . Shares have added about 0.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Insulet due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Insulet Q4 Earnings Fall Shy of Estimates, Revenues Beat

Insulet Corporation announced fourth-quarter 2020 loss per share of 26 cents against the year-ago earnings of 8 cents per share. Moreover, the reported loss per share were wider than the Zacks Consensus Estimate of a loss of 6 cents per share.

Full-year earnings per share were 10 cents, reflecting a 47.4% decrease from the year-ago period. Again, the metric lagged the Zacks Consensus Estimate by 68.8%.

Revenues

Revenues in the fourth quarter totaled $246.1 million, beating the Zacks Consensus Estimate by 6.3%. Moreover, the top line jumped 17.5% from the year-ago number (up 15.3% at constant exchange rate or CER). Notably, the quarterly revenues exceeded the company’s previous expectations of growth of 7-11% at CER.

The robust top-line performance was driven by the company’s growing customer base, increased Omnipod DASH adoption and the continued mix benefit with the shift into the pharmacy channel.

Full-year revenues were $904.4 million, reflecting a 22.5% uptick from the year-ago period (up 21.9% at CER). Again, the metric surpassed the Zacks Consensus Estimate by 1.6%. The full-year revenues exceeded the company’s previous expectations of growth of 20-21% at CER.

Segment in Detail

Insulet delivered fourth-quarter total Omnipod revenues of $231.1 million, reflecting an increase of 20.1% year over year (up 17.6% at CER).

International Omnipod revenues of $81.9 million were up 24.5% (up 17.5% at CER). The revenue uptick included benefits from better-than-expected new-customer starts.

U.S. Omnipod revenues grew 17.8% year over year to $149.2 million.

The Drug Delivery business revenues totaled $15 million, down 11.2% year over year, primarily due to production timing. However, it was ahead of the company’s expectation by $1 million for the fourth quarter.

Margins

Gross profit in the reported quarter was $161.1 million, up 20.1% from the prior-year quarter. Gross margin of 65.5% expanded 142 basis points (bps). According to the company, this included an approximate 40 bps adverse impact due to COVID-19-related safety and mitigation costs.

Meanwhile, selling, general & administrative expenses rose 61.6% to $130.1 million. Research and development expenses went up 8.2% year over year to $38.3 million. Operating loss totaled $7.3 million compared with the prior-year quarter’s operating profit of $18.2 million.

2021 Guidance

Insulet has issued its financial outlook for first-quarter and full-year 2021.

Overall, for the year, total revenues are expected to grow in the band of 17-22% on a reported basis (15-20% at CER). The Zacks Consensus Estimate for total revenues is pegged at $1.03 billion.

Total Omnipod revenues are likely to grow by 19-24% on a reported basis (17-21% at CER). However, Drug Delivery revenues are expected to be within the range of a fall by 11% and a growth of 4%.

For the first quarter of 2021, Insulet projects revenue growth of 24-28% on a reported basis (20-24% at CER). The Zacks Consensus Estimate for total revenues is pegged at $228.9 million.

Total Omnipod revenues are likely to grow by 20-23% on a reported basis (16-19% at CER). Further, Drug Delivery revenues are expected to surge by 120-140% (representing a range of $18 million to $20 million).

Our Take

Insulet exited the fourth quarter on a strong note with better-than-expected revenues, thanks to year-over-year improvement in the same on the solid uptake of the Omnipod system, both in the United States and international markets. This stupendous growth amid the crisis was primarily due to record revenue growth in total Omnipod product line along with growth in other segments. The momentum of Omnipod DASH is encouraging, based on the solid uptake in geographies in which it has been launched. The completion of the full international commercial launch of Omnipod DASH looks impressive. The company’s plans of geographical expansion buoy optimism. Gross margin expansion is encouraging as well.

However, the rising expenses and operating loss creating a huge bottom-line pressure, and in turn resulting in net loss for the quarter, is concerning.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in fresh estimates.

VGM Scores

At this time, Insulet has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Insulet has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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