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ABIOMED (ABMD) Q3 Earnings Beat, Impella Maintains Momentum

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ABIOMED, Inc. (ABMD - Free Report) reported third-quarter fiscal 2019 earnings of 97 cents per share, which surpassed the Zacks Consensus Estimate of 94 cents. The bottom line also skyrocketed 235% from the figure registered in the year-ago quarter.

Revenues came in at $200.6 million, missing the Zacks Consensus Estimate by 0.02%. However, the metric improved 30.2% from the prior-year quarter. The stock has a Zacks Rank #3 (Hold).

Q3 in Detail

Geographic Analysis

Per management, U.S. revenues rose 27% year over year to $173 million driven by 24% increase in overall patient utilization in the fiscal third quarter. Outside the United States, revenues totaled $28 million, up 59% from the year-ago quarter owing to strength in Germany and Japan.

Japan had a strong quarter, contributing $5.4 million to revenues in the third quarter.

Impella Sustains Momentum

ABIOMED’s flagship Impella heart pump revenues summed $193.3 million in the third quarter, globally. Per management, this shows a year-over-year upside of 31%.

U.S. Impella heart pump revenues totaled $165.7 million in the reported quarter, reflecting 27% increase from the prior-year quarter.

Outside the United States, Impella heart pump revenues came in at $27.5 million, up 59%.

Furthermore, the Impella 2.5 and CP were placed at approximately 1,300 sites in the United States by the end of the reported quarter. Meanwhile, the Impella 5.0 and RP were placed at 578 and 400 sites, respectively.

ABIOMED has been steadily investing to expand the platforms of Impella CP, Impella Connect, Impella 5.5 and Impella RP. The company has also announced a new technology called Impella Connect. This new platform has received CE Mark approval in Europe.

ABIOMED, Inc. Price and Consensus

 

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

Margin Trend

In the quarter under review, gross margin was 83% of net revenues, down 80 basis points (bps) year over year. Per management, margins contracted due to sales mix and manufacturing investments.

Research & Development (R&D) costs grossed $24 million, up 35.3% year over year.

Operating income totaled $62.4 million, up 39.3% on a year-over-year basis. Operating margin was 31.1%, up 200 bps.

Financial Condition

ABIOMED’s balance sheet remains debt free. The company ended the fiscal third quarter with $458 million of cash and marketable securities.

FY19 Outlook

ABIOMED raised its fiscal 2019 guidance.

For the fiscal year, the company expects revenues of $780 million, up from the previously issued range of $765-$770 million. This marks an increase of approximately 31% year over year. Notably, the Zacks Consensus Estimate is pegged at $771.4 million, above the guided range. ABIOMED expects to see strong contribution from its core Impella product lines in the quarters ahead.

GAAP operating margin is anticipated in the range of 29-29.5% in fiscal 2019. This compares to the previously issued projection of 28-30%.

For the fourth quarter of fiscal 2019, ABIOMED expects revenues to be approximately $218 million, up 25% on a year-over-year basis.

Summing Up

ABIOMED wrapped up the third 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 added positives.

Revenues from Japan also shot up in the quarter. Raised guidance for fiscal 2019 is indicative of brighter prospects. Considerable expansion in the operating margin too buoys optimism. Meanwhile, surging R&D expenses show increasing focus on innovation. In fact, the company continues to invest in training and education.

However, contraction in the company’s gross margin raises concern. Margins are primarily hurt by unfavorable sales mix and heavy manufacturing investments. Intense competition in the MedTech industry is likely to mar prospects.

Earnings of Other MedTech Majors at a Glance

Some better-ranked MedTech stocks that posted solid results in their respective quarters are Varian Medical Systems (VAR - Free Report) , Surmodics, Inc. (SRDX - Free Report) and AngioDynamics (ANGO - Free Report) .

Varian’s first-quarter fiscal 2019 adjusted earnings came in at $1.06 per share in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2 (Buy).

Surmodics reported adjusted earnings of 12 cents per share in first-quarter fiscal 2019, comparing favorably with the Zacks Consensus Estimate of a loss of a penny. Earnings rose 20% from the year-ago quarter’s figure.The stock has a Zacks Rank of 2.

AngioDynamics’ second-quarter fiscal 2019 adjusted earnings of 22 cents per share surpassed the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which outshined the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

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