Insulet Delivers 26% Revenue Growth and Raises 2017 Guidance; Stock Pumps Up 7%

Insulet (PODD 1.62%) reported second-quarter 2017 earnings after the market closed on Thursday. 

The drug-delivery company, which is a leader in tubeless insulin pump technology with its Omnipod Insulin Management System, delivered revenue growth of 26% -- which exceeded its guidance -- while its loss per share widened, driven by increased research-and-development expenses and interest expenses. The company also raised its revenue guidance for 2017.  

The market liked the results, sending Insulet shares to a closing gain of 7.1% on Friday. The stock has gained 51.5% for the one-year period through Friday, outpacing the S&P 500's total return of 16.9%.

Insulet's results: The raw numbers

Data source: Insulet.

Revenue exceeded the company's guidance of $104 million to $108 million. Insulet doesn't provide earnings guidance. For additional context -- through long-term investors shouldn't give too much importance to Wall Street's near-term estimates -- analysts were looking for a loss of $0.13 per share on revenue of $106.1 million. So Insulet's earnings hit the consensus on the bull's-eye, while its revenue exceeded expectations. 

Image source: Insulet.

What happened with Insulet in the quarter?

• U.S. Omnipod's revenue increased 16% year over year to $65.4 million.
• International Omnipod's revenue soared 60% to $26.6 million. Growth was driven by continued very strong adoption in France, CEO Patrick Sullivan said on the analyst conference call. 
• Drug delivery's revenue grew 23% to $17.8 million. Growth in this business continued to be largely driven by Amgen's Neulasta Onpro kit, which includes Insulet's Omnipod tech. Sullivan said on the earnings call that Amgen's sales of its Onpro kit represented over 55% of the U.S. Neulasta doses at the end of the second quarter. 
• Gross margin was 58.9%, up 110 basis points (1.1 percentage points) from the year-ago period, driven by improved manufacturing and operational execution. Sullivan said on the call that the company is increasing its long-term gross margin target from 65% to 70% due to its plans in Europe, discussed next. 
• The company announced in the quarter that it will transition to directly distributing and commercially supporting its Omnipod System in Europe beginning on July 1, 2018. Sullivan said on the call that the company expects that this move will accelerate international growth and improve margins. 

What management had to say

Here's what Sullivan had to say in the press release:

We are very pleased with our performance so far this year. We demonstrated strong momentum across our business and made substantial progress on our commercial and operational strategies. In the second quarter, our 26% revenue growth exceeded our expectation, and we achieved a 110 basis point improvement in gross margin. We released additional positive results from our Omnipod Horizon system clinical trials during the quarter and are investing in innovation to further differentiate our product offerings in the marketplace.

Looking ahead

Insulet posted another solid quarter. The company increased its revenue guidance range for 2017 and established third-quarter guidance as follows:

Data source: Insulet.

Going into the earnings release, Wall Street was estimating that Insulet would post third-quarter revenue of $110.2 million.