Image source: Insulet.

Insulet (PODD 0.70%) reported its third-quarter 2016 earnings after the market closed on Thursday. The drug delivery company, which is a leader in tubeless insulin pump technology with its OmniPod System, delivered revenue growth that exceeded its expectations and, as it did last quarter, raised full-year 2016 guidance. 

Shares of Insulet pumped up roughly 15% in trading on Friday.

Insulet's key Q3 numbers  


Q3 2016

Q3 2015

Growth (YOY)

Revenue from continuing operations

$94.9 million

$71.4 million


Operating income

$2.4 million

 ($14.8 million)


Net income from continuing operations

($3.0 million)

($18.0 million)


Net income

($3.1 million)

($18.9 million)


Earnings per share




Earnings per share adjusted for discontinued operations




YOY = year over year. Data source: Insulet.

Revenue exceeded the company's guidance of $88 million to $91 million. Insulet does not provide earnings guidance.

Wall Street was expecting an adjusted EPS loss of $0.09 on revenue of $89.74 million, so Insulet cruised by both estimates. Long-term investors shouldn't give too much credence to analysts' estimates since Wall Street is focused on the short term. However, they can be handy to know because along with forward guidance they often help explain market reactions.

Revenue breakdown by business 

  • U.S. OmniPod: Revenue rose 18% to $59.6 million.
  • International OmniPod: Revenue jumped 41% to $19.1 million.
  • Drug delivery: Revenue soared 128% to $16.1 million. Once again this increase was largely driven by the success of Amgen's Neulasta Onpro kit, which includes Insulet's OmniPod technology, CEO Patrick Sullivan said on the analyst conference call. Sullivan stated that Amgen said on its earnings call last week that this product now represents 44% to 45% of its Neulasta business and that it expects that number to reach 50% by year end. This is rapid adoption since the product was approved by the FDA just before the start of 2015.

What happened with Insulet this quarter?

  • Gross margin soared to 58.6%, up more than 1,400 basis points (14 percentage points), reflecting significant manufacturing and operational improvements. Sullivan said on the earnings call that the company is on track to achieve gross margin of 65% or greater over the coming years. He noted that a main driver of the gross margin expansion will be the automated manufacturing operation in the U.S. that the company plans to establish. It will begin production in 2019.
  • Publication in the Journal of Diabetes Technology & Therapeutics demonstrating the quality of life benefits of Insulet's Omnipod System for people living with Type 1 and Type 2 diabetes.

What management had to say

Sullivan outlined the company's positive momentum in the press release:

We continued to achieve growth across all business lines, generating better-than-anticipated revenue and driving additional gross margin expansion in the third quarter. We are successfully implementing our commercial and operational initiatives, as well as continuing to take steps forward in our product pipeline development efforts, including our artificial pancreas program. Longer term, we remain focused on delivering sustainable and profitable growth and increasing value for our shareholders. 

Looking ahead 

As it did last quarter, Insulet hiked its full-year 2016 revenue guidance. It also established Q4 revenue guidance as follows:


Revenue Guidance

Pro Forma* Growth YOY

Q4 2016

$99 million to $102 million

20% at mid-point of range

FY 2016

$362 million to $365 million (up from $345 million to $355 million)

38% at mid-point of range

*Pro forma growth excludes 2015 revenue contributed by Neighborhood Diabetes, which Insulet sold in Feb. 2016. Data source: Insulet.

Sullivan said on the call that the company expects U.S. Omnipod year-over-year revenue growth of approximately 20%, up from its previous guidance of upper teens; international Omnipod growth of approximately 80%, up from its previous guidance of 65%; and drug delivery growth of approximately 90%, which represents $4 million more than its previous expectations.