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Abiomed (ABMD) Q2 Earnings Beat, Impella Maintains Momentum

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Abiomed, Inc. (ABMD - Free Report) reported second-quarter fiscal 2019 earnings per share of 81 cents, which surpassed the Zacks Consensus Estimate by 11%. Adjusted earnings skyrocketed 84.1% from the year-ago quarter.

Revenues in the reported quarter came in at $181.8 million, outpacing the Zacks Consensus Estimate of $175.3 million. Revenues also improved 36.9% from the prior-year quarter.

Meanwhile, the Zacks Rank #1 (Strong Buy) stock has rallied 98.3% compared with the industry’s 17.8% in a year’s time. The current level is also higher than the S&P 500 index’s rise of 6.4%.

ABIOMED, Inc. Price, Consensus and EPS Surprise

ABIOMED, Inc. Price, Consensus and EPS Surprise | ABIOMED, Inc. Quote

Q2 in Detail

Geographic Analysis

Per management, U.S. revenues rose 33% year over year to $158 million, driven by a 29% increase in overall patient utilization in the second quarter. Outside the United States, revenues were $24 million, up 67% from the year-ago quarter.

European revenues increased 38%, with German revenues up 33% year over year.

Additionally, the company recorded revenues of $4.1 million in Japan.

Impella Sustains Momentum

Abiomed’s flagship Impella heart pump revenues totaled $175.3 million in the second quarter, globally. Per management, this shows a year-over-year upside of 38%.

U.S. Impella heart pump revenues totaled $152.2 million in the reported quarter, reflecting an increase of 34% from the prior-year quarter.

Outside the United States, Impella heart pump revenues totaled $23.1 million, up 67%.

Furthermore, the Impella 2.5 and CP were placed at approximately 1,250 sites in the United States by the end of the reported quarter. Additionally, the Impella 5.0 and RP were placed at 559 and 368 sites, respectively.

Margin Trend

In the quarter under review, gross margin was 83.6%, down 10 basis points (bps) year over year. Per management, the benefit from higher volume was offset by manufacturing investments such as direct labor hires to support growth.

Research & Development (R&D) costs in the second quarter grossed $22.7 million, up 17.2% year over year.

Operating income in the quarter totaled $50.3 million, up 58.6% on a year-over-year basis. Operating margin was 27.7%, up 380 bps.

Financial Condition

Abiomed’s cash and marketable securities for the fiscal second quarter were $410.4 million. The company currently has no debt.

FY19 Outlook

Abiomed raised its fiscal 2019 guidance.

For fiscal 2019, the company expects revenues in the band of $765-$770 million, showing an increase of 29-30% from the previous fiscal. This compares to the earlier guidance of $755-$770 million, showing a year-over-year rise of 27-30%.

Notably, the Zacks Consensus Estimate is pegged at $768.2 million, within the guided range.

Abiomed expects to see strong contribution from its core Impella product lines in the quarters ahead.

Summing Up

Abiomed wrapped up the second quarter of fiscal 2019 on a solid note. The company continues to gain from its flagship Impella which saw a strong quarter in the United States. Impella’s patient success stories and increasing global adoptions are major positives. Revenues from Germany and Japan shot up in the quarter.

Raised guidance for fiscal 2019 is indicative of brighter prospects. Considerable expansion in the operating margin also buoys optimism. Meanwhile, surging R&D expenses show increasing focus on innovation. In fact, the company continues to invest in training and education. Abiomed’s balance sheet remains debt free.

However, contraction in the company’s gross margin raises concern. Intense competition in the industry is likely to mar prospects. Abiomed has significant international presence that exposes it to fluctuations in currency exchange rates.

Earnings of Other MedTech Majors at a Glance

Other top-ranked stocks in the broader medical space which also reported solid earnings this season are Intuitive Surgical (ISRG - Free Report) , Stryker Corp. (SYK - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) . Each of the stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported third-quarter 2018 adjusted earnings per share 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 earnings per share of $1.69, steering past the Zacks Consensus Estimate by a penny. Operating margin was 17.8%, up 30 bps.

Merit Medical reported third-quarter 2018 adjusted earnings per share 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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