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Insulet (PODD) Misses on Q2 Earnings, Ups '19 Revenue View

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Insulet Corporation (PODD - Free Report) reported earnings per share (EPS) of 2 cents in second-quarter 2019 against a net loss of 3 cents in the prior-year quarter. The figure, however, missed the Zacks Consensus Estimate for earnings of 3 cents by 33.3%.

Revenues in Detail

Revenues in the second quarter totaled $177.1 million, beating the Zacks Consensus Estimate by 8.6%. Moreover, the top line surged 42.5% from the year-ago number and also exceeded the company’s projected band of $160-165 million for second-quarter revenues.

Insulet delivered second-quarter U.S. Omnipod revenues of $98.1 million, reflecting an increase of 26% year over year.

Insulet Corporation Price, Consensus and EPS Surprise

Insulet Corporation Price, Consensus and EPS Surprise

Insulet Corporation price-consensus-eps-surprise-chart | Insulet Corporation Quote

International Omnipod revenues of $56.9 million were up 48%.

The Drug Delivery business’ revenues totaled $62.7 million, up 120% year over year.

Margins

Gross profit in the reported quarter was $116.4 million, up 41.8% from the prior-year quarter. However, gross margin of 65.7% contracted 33 basis points (bps) due to the impact of the highly automated US manufacturing line in Massachusetts that has just begun operations.

Although total operating expenses of $108.8 million escalated 39.9% from the year-ago figure, the operating margin expanded 81 bps to 4.3% in the second quarter.

2019 Guidance

For 2019, the company has raised its revenue expectation to the range of $700-$715 million from the prior estimate of $667-$690 million. This, in turn, suggests growth of roughly 24-27% from the level achieved in 2018 (earlier-expected growth rate was 18-22%). The Zacks Consensus Estimate for revenues is pegged at $683.3 million, near the upper end of the guided range.

For the third quarter of 2019, Insulet expects revenues in the band of $174-181 million, indicating an approximate increase of 15-20% from the year-ago reported number. The Zacks Consensus Estimate for the metric is pegged at $172.3 million, lower than the guided range.

Our Take

Insulet exited the second quarter on a mixed note as earnings lagged but revenues exceeded the respective Zacks Consensus Estimate. We are encouraged by the year-over-year improvement in revenues on the solid uptake of Omnipod system both in the United States and across international markets. We are also upbeat about Insulet’s solid revenue growth within its Drug Delivery segment.

The lifted outlook for 2019 and the company’s announcement to be on track for meeting its 2021 financial targets buoy optimism on the stock.

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

Zacks Rank and Key Picks

Insulet currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks flaunting solid results this earnings season are Stryker Corporation (SYK - Free Report) , Baxter International Inc. (BAX - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .

Stryker delivered second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Further, revenues of $3.65 billion surpassed the Zacks Consensus Estimate by 1.4%. The company carries a Zacks Rank #2.

Baxter posted second-quarter 2019 adjusted earnings of 89 cents per share, outpacing the Zacks Consensus Estimate of 81 cents by 9.9%. Moreover, revenues of $2.84 billion trumped the Zacks Consensus Estimate of $2.79 billion by 1.9%. The company has a Zacks Rank of 2.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, topping the Zacks Consensus Estimate of $2.85. Also, revenues of $1.1 billion exceeded the Zacks Consensus Estimate of $1.03 billion. The company sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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