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Insulet (PODD) Q2 Earnings Miss Estimates, Revenues Beat

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Insulet Corporation (PODD - Free Report) announced second-quarter 2021 adjusted earnings of 10 cents per share, reflecting a 54.5% decline from the year-ago earnings of 22 cents. Earnings also missed the Zacks Consensus Estimate by 16.7%.

The quarter’s adjustments exclude the impact from loss on extinguishment of debt of $40.1 million related to the company's repurchase of convertible notes.

On a GAAP basis, Insulet reported loss of 37 cents per share for second-quarter 2021.

Revenues

Revenues in the second quarter totaled $263.2 million, beating the Zacks Consensus Estimate by 2.1%. Moreover, the top line jumped 16.3% from the year-ago number (up 12.5% at constant exchange rate or CER). Notably, quarterly revenues were within the company’s previous growth expectations of 10-14% at CER.

Segment in Detail

Insulet’s second-quarter total Omnipod revenues of $242.1 million reflect an increase of 19.9% year over year (up 15.6% at CER). International Omnipod revenues of $91.6 million rose 25.1% (up 13.4% at CER). U.S. Omnipod revenues grew 16.8% year over year to $150.5 million.

Insulet Corporation Price, Consensus and EPS Surprise

 

Insulet Corporation Price, Consensus and EPS Surprise

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

The Drug Delivery business revenues totaled $21.1 million, down 13.2% year over year.

Margins

Gross profit in the reported quarter was $182.7 million, up 28.2% from the prior-year quarter. Gross margin of 69.4% expanded 645 basis points (bps).

Meanwhile, selling, general & administrative expenses rose 43.9% to $116.3 million. Research and development expenses went up 17.3% year over year to $40.1 million.

Operating income totaled $26.3 million, reflecting a 4.4% fall from the prior-year quarter. Accordingly, operating margin in the second quarter contracted 216 bps to 9.9%.

Cash Position

Insulet exited the second quarter of 2021 with cash and cash equivalents of $872.1 million compared with $850.2 million at the end of first-quarter 2021.

Guidance

Insulet has updated its financial outlook for third-quarter 2021 and reaffirmed its full-year 2021 guidance.

For the year, the company expects to maintain its revenue guidance at the range of 16-20% at CER. The Zacks Consensus Estimate for total revenues is pegged at $1.08 billion.

Insulet’s total Omnipod revenue projection has been maintained at 18-21% at CER. Whereas, the company reaffirmed its outlook for the Drug Delivery arm, which is expected within the range of a fall of 11% and growth of 4%.

For the third quarter of 2021, Insulet projects revenue growth of 11-18% at CER. The Zacks Consensus Estimate for total revenues is pegged at $272.51 million.

Total Omnipod revenues are likely to grow 17-23% at CER. However, Drug Delivery revenues are expected to fall 40-28%.

Our Take

Insulet exited the second quarter of 2021 on a mixed note with lower-than-expected adjusted earnings and better-than-expected revenues. On a positive note, there has been a year-over-year improvement in the top line on solid uptake of the Omnipod system, both in the United States and international markets. This growth amid the pandemic was primarily due to robust revenue growth in the Omnipod product line. The compelling clinical data demonstrating the efficacy of the Omnipod product platform buoys optimism for the stock. The company’s plan to launch the Omnipod 5 looks encouraging as well. Expansion of gross margin is another upside.

However, the projection of a significant fall in Drug Delivery sales in 2021 is concerning. Further, rising expenses are leading to contraction in operating margin. A year-over-year decline in gross profit does not bode well either. Overall, the continued pandemic-led choppy market conditions raise apprehensions.

Zacks Rank and Key Picks

Insulet currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced their quarterly results are Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Bruker Corporation (BRKR - Free Report) , each sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Encompass Health reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Revenues of $1.3 billion outpaced the consensus mark by 1.5%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

Bruker reported second-quarter 2021 adjusted EPS of 44 cents, surpassing the Zacks Consensus Estimate by 10%. Revenues of $570.8 million surpassed the Zacks Consensus Estimate by 6.1%.