Abiomed, Inc. delivered adjusted earnings per share (EPS) of $1.25 in the first quarter of fiscal 2023, up 13.6% year over year. The figure surpassed the Zacks Consensus Estimate by 15.7%.

Our projection of adjusted EPS was $1.15.

GAAP EPS for the quarter was $1.19 against the year-earlier loss per share of 59 cents.

Revenues in Detail

Abiomed registered revenues of $277.1 million in the fiscal first quarter, up 9.7% year over year. The figure, however, lagged the Zacks Consensus Estimate by 0.4%.

At constant exchange rate (CER), revenues improved by 12%.

The second-quarter revenue compares to our estimate of $277.9 million, up 10% on a reported basis and 11% at CER.

The top line was driven by continued strength in the company’s Impella heart pump product revenues across the world.

Q1 in Detail

Worldwide Impella heart pump product revenues for the quarter totaled $264.5 million, an increase of 9.5% from the prior-year quarter. At CER, revenues improved 12%.

U.S. Impella product revenues totaled $215.6 million, reflecting a rise of 9.2% year over year on the back of a 6% surge in patient utilization.

Outside the United States, Impella product revenues totaled $48.9 million, highlighting an increase of 11.1% year over year on a reported basis and 26% at CER.

Japan product revenues improved 17.6% year over year on a reported basis (up 39% at CER) to $12.8 million, while Europe product revenues for the quarter totaled $32.6 million, up by 4.3% on a reported basis and 18% at CER compared with the prior-year quarter.

Abiomed, Inc. Price, Consensus and EPS Surprise

Abiomed, Inc. price-consensus-eps-surprise-chart | Abiomed, Inc. Quote

Margin Trend

In the quarter under review, Abiomed’s gross profit rose 8.3% to $224.5 million. Gross margin contracted 110 basis points (bps) to 81%.

We had projected gross margin of 83.7% for the fiscal first quarter.

Selling, general & administrative expenses rose 14% to $117.9 million. Research and development expenses went up 7.3% year over year to $40.5 million. Adjusted operating expenses of $158.5 million increased 12.2% year over year.

Adjusted operating profit totaled $66.1 million, reflecting a 0.2% dip from the prior-year quarter. Adjusted operating margin in the fiscal first quarter contracted 238 bps to 23.8%.

Adjusted operating margin, according to our model, was 26.4% for the fiscal first quarter.

Financial Position

Abiomed exited the first quarter of fiscal 2023 with cash and cash equivalents of $180.5 million compared with $132.8 million at the end of fiscal 2022.

The balance sheet was debt free as of Mar 31, 2022.

Net cash flow from operating activities at the end of first quarter of fiscal 2023 was $68 million compared with $55.4 million a year ago.

At the time of the fiscal first-quarter earnings release, Abiomed confirmed that its management had approved a new stock repurchase program authorizing the company to repurchase up to $200 million of common stock.

Guidance

Abiomed has revised its financial outlook for fiscal 2023.

The company now anticipates global revenues in the range $1.13-$1.17 billion, representing a 10-14% reported growth from the comparable reported figure of fiscal 2022. This is lower than the earlier projections of full-year revenues of $1.14 billion-$1.18 billion, representing an 11-15% reported growth from the comparable reported figure of fiscal 2022. The Zacks Consensus Estimate for the same is currently pegged at $1.17 billion, which matches with the upper range of the company-provided outlook.

At CER, full-year global revenues are continued to be expected to reflect a 13-17% growth.

Our Take

Abiomed exited the first quarter of fiscal 2023 with better-than-expected earnings. The year-over-year uptick in the top and bottom lines, and continued strength in its global Impella revenues are impressive. Abiomed’s progress regarding its Impella product line raises investors’ optimism regarding the stock. The company’s robust geographical performance is also encouraging. Abiomed confirmed receiving the FDA’s approval for the RECOVER IV randomized controlled trial at the time of the earnings release, which looks promising. Notably, the company continued to witness a deleveraged balance sheet in the quarter under review.

However, lower-than-expected revenues in the fiscal first quarter are disappointing. The contraction of both margins does not bode well. Stiff competition and forex woes continue to bother Abiomed.

Zacks Rank and Key Picks

Abiomed currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX Quick QuoteDGX - Free Report) , Humana Inc. (HUM Quick QuoteHUM - Free Report) and Alkermes plc (ALKS Quick QuoteALKS - Free Report) .

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 7% compared with the industry’s 3.2%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Humana, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $8.67, which beat the Zacks Consensus Estimate by 13%. Revenues of $23.7 billion outpaced the consensus mark by 1.2%.

Humana has an estimated long-term growth rate of 13.5%. HUM’s earnings surpassed estimates in all the trailing four quarters, the average being 9.1%.

Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Alkermes has an estimated long-term growth rate of 24.9%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.