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Insulet (PODD) Q1 Earnings Fall Shy of Estimates, Revenues Beat

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Insulet Corporation (PODD - Free Report) announced break-even earnings for first-quarter 2021 against the year-ago loss of 3 cents per share. However, the metric lagged the Zacks Consensus Estimate of earnings per share (“EPS”) of 6 cents per share.

Revenues

Revenues in the first quarter totaled $252.3 million, beating the Zacks Consensus Estimate by 2.9%. Moreover, the top line jumped 27.4% from the year-ago number (up 23.9% at constant exchange rate or CER). Notably, quarterly revenues achieved the high end of the company’s previous expectations of growth of 20-24% 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.

Segment in Detail

Insulet’s first-quarter total Omnipod revenues of $233.2 million reflect an increase of 22.9% year over year (up 19.2% at CER).

International Omnipod revenues of $89.9 million were up 23% (up 13.4% at CER). The revenue uptick resulted from the company’s expanding customer base and ability to navigate through the pandemic-led challenges. Timing of the Personal Diabetes Manager orders also contributed to the International Omnipod revenues.

Insulet Corporation Price, Consensus and EPS Surprise

 

Insulet Corporation Price, Consensus and EPS Surprise

Insulet Corporation price-consensus-eps-surprise-chart | Insulet Corporation Quote

U.S. Omnipod revenues grew 22.9% year over year to $143.3 million.

The Drug Delivery business revenues totaled $19.1 million, up 130.1% year over year, primarily banking on increased product demand.

Margins

Gross profit in the reported quarter was $167.5 million, up 31.9% from the prior-year quarter. Gross margin of 66.4% expanded 230 basis points (bps). According to Insulet, this expansion was primarily driven by improved manufacturing operations and supply chain efficiencies, the ongoing benefit derived from the transition into the pharmacy channel in the United States and a decline in COVID-19-related mitigation costs.

Meanwhile, selling, general & administrative expenses rose 31.7% to $110.5 million. Research and development expenses went up 14.6% year over year to $40.7 million.

Operating income totaled $16.3 million, reflecting a 117.3% surge from the prior-year quarter. Further, operating margin in the first quarter expanded 267 bps to 6.5%.

Guidance

Insulet has issued its financial outlook for second-quarter 2021 and raised the lower-end of the earlier-provided full-year 2021 guidance.

For the year, revenues are expected to grow in the band of 16-20% at CER, compared with the earlier expectations of a growth of 15-20% at CER. On a reported basis, the revenue growth is projected within 18-22% compared with the earlier expectations of 17-22%. The Zacks Consensus Estimate for total revenues is pegged at $1.08 billion.

Insulet’s total Omnipod revenues are now expected to grow in the range of 20-24% on a reported basis compared with the earlier projection of 19-24%. At CER, the revenue uptick is expected to be within 18-21% compared with the previous outlook of 17-21%. However, the company reiterated its outlook for the Drug Delivery arm, which is expected to be within the range of a fall of 11% and a growth of 4%.

For the second quarter of 2021, Insulet projects revenue growth of 13-17% on a reported basis (10-14% at CER). The Zacks Consensus Estimate for total revenues is pegged at $259.4 million.

Total Omnipod revenues are likely to grow by 18-21% on a reported basis (14-17% at CER). However, Drug Delivery revenues are expected to fall by 24-16% in the second quarter.

Our Take

Insulet exited the first quarter of 2021 on a strong note with better-than-expected revenues, thanks to year-over-year improvement of the same on solid uptake of the Omnipod system, both in the United States and international markets. This stupendous growth amid the pandemic was primarily due to robust revenue growth in total Omnipod product line. The momentum of Omnipod DASH is encouraging, based on solid uptake in various geographies. The company’s plans of geographical expansion as well as launching Omnipod 5 buoy optimism. Expansion of both margins is encouraging as well.

However, rising expenses of the company are concerning. Also, the continued pandemic-led choppy market conditions raise our apprehension.

Zacks Rank and Stocks to Consider

Insulet currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader medical space are Boston Scientific Corporation (BSX - Free Report) , CONMED Corporation (CNMD - Free Report) and HCA Healthcare, Inc. (HCA - Free Report) .

Boston Scientific reported first-quarter 2021 adjusted EPS of 37 cents, beating the Zacks Consensus Estimate by 23.3%. Net revenues of $2.75 billion outpaced the consensus estimate by 5.3%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CONMED, a Zacks Rank #2 company, reported first-quarter 2021 adjusted EPS of 63 cents, beating the Zacks Consensus Estimate by 46.5%. Revenues of $232.7 million outpaced the consensus mark by 7%.

HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%. It currently carries a Zacks Rank #2.

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