Medical-device maker Abiomed (ABMD +0.00%) reported its fiscal third-quarter earnings on Thursday, Feb. 1. The results showed that the company is performing well in just about every meaningful operating metric. What's more, the upbeat results allowed management to raise its guidance for the full fiscal year 2018 once again.
Let's put Abiomed's results under the microscope to see what's going right for the innovative heart pump company.
Image source: Getty Images.
Abiomed's fiscal third quarter: The raw numbers
|
Metric |
Q3 2018 |
Q3 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$154 million |
$115 million |
34% |
|
GAAP net income |
$13.4 million |
$15.4 million |
(13%) |
|
Adjusted net income |
$32.2 million |
$15.4 million |
109% |
|
Adjusted earnings per share |
$0.70 |
$0.34 |
106% |
Data source: Abiomed.
What happened with Abiomed this quarter?
- Worldwide Impella heart pump sales grew 36% to $148 million. That number was driven by 30% sales growth in the U.S. and 94% sales growth in international markets. Management noted that Germany largely drove the international gains, though sales in Japan did hit $1.1 million.
- The installed base for all of the company's Impella heart pumps grew in the U.S. during the quarter.
- GAAP net income declined year over year because of the recent changes to the U.S. tax code.
- Operating margin jumped by 6.9 percentage points to 29.1%.
- Cash balance at quarter end was $350.7 million, and the company's balance sheet remains debt-free.
What management had to say
CEO Michael Minogue opened up his commentary on the call with investors by stating that Abiomed "delivered the best-ever quarterly results on nearly every metric." Even with those strong results, he was quick to highlight that Impella is still only used in about 9% of high-risk Percutaneous Coronary Intervention (PCI) procedures in the U.S.
Minogue also provided investors with some numbers that suggest that the opportunity in international markets also remains huge. The company estimates that its penetration rate in Germany is just 12% and that it has barely started to scratch the surface of what's possible in Japan.
Interim CFO Robert Bowen noted on the call that the company's reorder rate during the quarter was "approximately 100%." He also mentioned that the recent changes to the U.S. tax code will reduce the company's effective tax rate starting in fiscal 2019.
Finally, Minogue also commented that the company's strong balance sheet is allowing it to invest in its future:
We are investing in innovation, education, and our patent portfolio. This quarter, we marked a new milestone of 300 patents awarded and an additional 272 patents pending. It is an exciting time as we collaborate with our customers to improve patient outcomes and the standard of care for circulatory support.
Looking forward
The upbeat fiscal third-quarter results allowed management to increase its forward guidance. The company is now projecting fiscal year 2018 revenue of $583 million, which, if achieved, would represent growth of 31% year over year. This guidance implies that revenue in the upcoming quarter will be $164 million.
Turning to GAAP operating margin, management expects this number to be 26% for the year. That also represents an improvement from its prior outlook of 23% to 25%.
All in all, it was another great quarter for the heart pump maker. Minogue ended his commentary on the call by reminding investors that Abiomed is well positioned to execute the $5 billion market opportunity that exists in the U.S. alone:
In summary, this quarter's execution enabled the best results in revenue, operating margin, cash generation, patents, and patient utilization in the U.S., Germany and Japan. As a company, we are especially proud of our ability to work together with our hospitals to help improve patient outcomes. Abiomed continues to be one of the fastest-growing MedTech companies with increasing GAAP profitability.
