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Insulet (PODD) Beats on Q3 Earnings, Ups '19 Revenue View

Zacks Equity Research

Insulet Corporation’s PODD adjusted earnings per share (EPS) of 9 cent in third-quarter improved significantly from the year-ago GAAP EPS. The reported figure also outpaced the Zacks Consensus Estimate of 3 cents. The quarter’s adjustment includes certain one-time, non-cash charge related to the extinguishment of the company’s 2021 convertible notes.

Revenues in the third quarter totaled $192.1 million, beating the Zacks Consensus Estimate by 7.4%. Moreover, the top-line figure jumped 27.1% from the year-ago number.

Insulet delivered third-quarter U.S. Omnipod revenues of $109.5 million, reflecting an increase of 34% year over year.

International Omnipod revenues of $67.7 million were up 35%.

The Drug Delivery business’ revenues totaled $14.9 million, down 21% 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



Gross profit in the reported quarter was $123.1 million, up 20.7% from the prior-year quarter. However, gross margin of 64.1% contracted 343 basis points (bps). Although total operating expenses of $106.1 million escalated 11.5% from the year-ago figure, the operating margin expanded 431 bps to 8.9% in the third quarter.

2019 Guidance

For 2019, the company has raised its revenue expectation to the range of $722 million to $730 million, from the prior estimate of $700-$715 million. This, in turn, suggests growth of roughly 28-29% from the level achieved in 2018 (earlier-expected growth rate was 24-27%). The Zacks Consensus Estimate for revenues is pegged at $710.2 million, below the guided range.

For the fourth quarter of 2019, Insulet projects revenues in the $193-$201 million band, indicating an increase of 17-22% from the year-ago reported number. The Zacks Consensus Estimate for the metric is pegged at $189.1 million, lower than the guided range.

Our Take

Insulet exited the third quarter on a promising note, with better-than-expected numbers. The year-over-year improvement in revenues on the solid uptake of Omnipod system, both in the United States and across international markets, looks encouraging. The lifted outlook for 2019 and the company’s announcement to be on track for meeting its 2021 financial targets also buoy optimism on the stock. The recent FDA clearance of the Alternate Controller Enabled (ACE) Infusion Pump is impressive. We are upbeat about the completion of the full-market commercial launch of the Omnipod DISPLAY and Omnipod VIEW apps for use with the Omnipod DASH System. We are, however, disappointed with the revenue decline in its Drug Delivery segment during the third quarter. Also, Insulet is exposed to risks associated with a weaker global economy and lower reimbursement rates.

Zacks Ranks & Earnings of Other MedTech Majors at a Glance

Insulet carries a Zacks Rank #3 (Hold).

Some better-ranked companies, which posted solid results this earnings season, are Edwards Lifesciences EW, Thermo Fisher Scientific TMO and ResMed RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the consensus estimate by 1.3%.

ResMed reported first-quarter fiscal 2020 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues came in at $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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