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Insulet (PODD) Beats Earnings and Revenue Estimates in Q4

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Insulet Corporation (PODD - Free Report) reported earnings per share (EPS) of 16 cents in fourth-quarter 2018 against net loss of 12 cents a year ago. The figure also surpassed the Zacks Consensus Estimate of earnings of 6 cents by 166.7%.

EPS in 2018 was 5 cents against a net loss of 46 cents in the year-ago quarter. The figure compares favorably with the Zacks Consensus Estimate of a loss of 5 cents.

Revenues in Detail

Revenues in the fourth quarter totaled $164.9 million, beating the Zacks Consensus Estimate by 1.6%. Moreover, the top line improved 26.4% 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 revenues. An expanding global customer base also played a role.

Revenues in 2018 came in at $563.8 million, up 21.6% year over year. Moreover, the figure beat the Zacks Consensus Estimate of $561.3 million.

Insulet reported fourth-quarter 2018 U.S. Omnipod revenues of $93.2 million, reflecting an increase of 22% year over year.

International Omnipod revenues of $55 million rose 54%.

Revenues at the Drug Delivery business totaled $16.7 million, down 8% year over year.

Margins

Gross profit in the reported quarter grossed $110.3 million, up 38.7% from the prior-year quarter. Gross margin came in at 66.9%, up 600 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 $94.1 million compared with $80.3 million in the prior-year quarter. Operating income in the reported quarter was $16.2 million against net operating $0.77 million loss of in the year-earlier quarter.

Guidance Provided

For 2019, the company expects revenues in the range of $662-$687 million, compared to 2018 revenues of $563.8 million. This reflects growth of roughly 17-22%. The Zacks Consensus Estimate for revenues is pegged at $689.8 million, above the guided range.

For the first quarter of 2019, Insulet expects revenues in the band of $152-156 million, reflecting growth of approximately 23-27% compared with $123.6 million in the year-ago quarter. The Zacks Consensus Estimate for the metric is pegged at $155.9 million, near the high end of the guided range.

Our Take

Insulet exited 2018 on a solid note. The company witnessed more than 20% revenue growth for the third consecutive year. Insulet has also been witnessing a mid-60s improvement in gross margin, which buoys optimism. Furthermore, in its history of around 20 years, the company has recorded net income for the first time. In 2018, Insulet has gained access to the additional 40% of the U.S. diabetes market, where it didn't have presence initially.

We are encouraged by the year-over-year improvement in results on solid uptake of Omnipod system in the United States. An expanding global customer base also drove revenues. We are upbeat about Insulet’s solid progress with respect to its four-pillar strategy as well.

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).

Some better-ranked MedTech stocks that posted solid quarterly results are Varian Medical Systems (VAR - Free Report) , AngioDynamics (ANGO - Free Report) and CONMED Corporation (CNMD - Free Report) . 

Varian reported fiscal first-quarter adjusted EPS of $1.06, 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).

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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