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Insulet (PODD) Beats Earnings and Revenue Estimates in Q3

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Insulet Corporation (PODD - Free Report) reported earnings per share (EPS) of 3 cents in third-quarter 2018 against net loss of 4 cents a year ago. The figure also surpassed the Zacks Consensus Estimate of 2 cents by 50%.

Revenues in Detail

Revenues in the third quarter totaled $151.1 million, beating the Zacks Consensus Estimate by 1.7%. Moreover, the top line improved 24.1% from the year-ago quarter.

Per management, the company’s direct European operations, progress in market access initiatives, build out of the U.S. manufacturing facility and the limited commercial launch of the Omnipod DASH system drove the upside in revenues. An expanding global customer base also played a role.

Insulet reported U.S. Omnipod revenues of $82 million, reflecting an increase of 17% year over year.

International Omnipod revenues of $50.2 million rose 55%.

Insulet Corporation Price, Consensus and EPS Surprise


Revenues at the Drug Delivery business totaled $18.9 million, down 2% year over year.


Gross profit in the reported quarter grossed $102 million, up 38.6% from the prior-year quarter. Gross margin came in at 67.5%, up 700 basis points (bps) on continuous improvement in manufacturing and supply chain operations. Furthermore, successful transition to direct operations in Europe led to an added benefit of 400 bps to the gross margin.

Total operating expenses came in at $95.1 million compared with $71.6 million in the prior-year quarter. Operating income in the reported quarter was $6.9 million, up from $2 million in the year-earlier quarter.

Guidance Revised

For 2018, the company raised the low end of its revenue guidance to a range of $558-$563 million from $547-$562 million expected earlier, reflecting growth of around 20-21% from $463.8 million reported in 2017. The Zacks Consensus Estimate for revenues is pegged at $557.3 million, below the guided range.

For the fourth quarter of 2018, Insulet expects revenues in the band of $159-164 million, reflecting growth of approximately 22-26% compared with $130.5 million in the year-ago quarter. The Zacks Consensus Estimate for the metric is pegged at $155 million, below the guided range.

Our Take

Insulet exited third-quarter 2018 on a solid note. We are encouraged by the year-over-year improvement in results on solid uptake of Omnipod system in the United States. Encouragingly, the company recorded net income in the quarter for the first time. An expanding global customer base also drove revenues. Furthermore, an improvement in the gross margin buoys optimism. We are also upbeat about Insulet’s solid progress with respect to its four-pillar strategy.

At the end of the quarter under review, the company secured approximately a third of Medicare Part D covered lives for both Omnipod and Omnipod DASH systems. This also includes large Part D providers like Optum, Express Scripts and Magellan. 

Meanwhile, Insulet is exposed to risks associated with a weaker global economy and lower reimbursement rates. 

Zacks Rank & Key Picks

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

A few better-ranked stocks in the broader medical space, which reported solid earnings this season, are Intuitive Surgical (ISRG - Free Report) , Stryker Corporation (SYK - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Intuitive Surgical reported third-quarter 2018 adjusted EPS of $2.83, which beat the Zacks Consensus Estimate of $2.65. Revenues totaled $920.9 million, also surpassing the consensus estimate of $918.6 million.

Stryker posted third-quarter 2018 adjusted EPS of $1.69, steering past the Zacks Consensus Estimate of $1.68. Operating margin was 17.8%, up 30 bps.

Merit Medical reported third-quarter 2018 adjusted EPS of 47 cents, which trumped the Zacks Consensus Estimate of 42 cents. Revenues of $221.6 million edged past the consensus estimate of $218 million.

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