Insulet Pumps Out 26% Revenue Growth; Loss Narrows

Insulet (PODD 0.92%) reported fourth-quarter and full-year 2017 financial results after the market close on Wednesday. 

The drug delivery company, which is a leader in tubeless insulin pump technology with its Omnipod Insulin Management System, delivered year-over-year revenue growth of  26% -- exceeding its guidance -- and narrowed its loss per share to $0.12 from $0.16 in the year-ago quarter.

Shares of Insulet have been riding high: They're up 68% for the one-year period through Wednesday, outpacing the S&P 500's total return of nearly 17%.

Insulet's results: The raw numbers

Data source: Insulet. EPS = earnings per share.

Revenue exceeded the company's guidance of $123 million to $126 million. Insulet doesn't provide earnings guidance. For context, revenue grew 25%, 26%, and 28%, respectively, in the first, second, and third quarters.

For additional context -- though long-term investors shouldn't give too much importance to Wall Street's near-term estimates -- analysts were looking for a loss of $0.08 per share on revenue of $125.15 million. So Insulet beat the revenue consensus but fell short on the bottom line.

For full-year 2017, Insulet's revenue increased 26% to $463.8 million and its loss per share narrowed to $0.46 from $0.48 in 2016.

Image source: Getty Images.

What happened with Insulet in the quarter? 

• U.S. Omnipod's revenue increased 21% year over year to $76.5 million.
• International Omnipod's revenue soared 72% to $35.7 million.
• Drug delivery's revenue declined 7% to $18.3 million. 
• Gross margin was 60.9%, up 210 basis points (2.1 percentage points) from the year-ago quarter, due to continued improved manufacturing and operational performance. In the second quarter, Insulet increased its long-term gross margin target from 65% to 70% due to its plans to transition in July 2018 to a direct distribution model in Europe.
• Company established its European headquarters and leadership team in advance of its above noted July 1 transitioning.
• Early in 2018, Insulet received Medicare coverage eligibility under the prescription drug benefit for its Omnipod. This presents a huge growth opportunity for the company, as it opens up access to about one-third of the U.S. market.
• Also early in 2018, the company submitted its Omnipod DASH, its next-generation mobile platform, for Food and Drug Administration clearance.

What management had to say

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

Insulet had a very successful 2017 and our strong momentum this year gives us confidence for further improved performance in 2018. Our focus on commercial execution and operational excellence drove revenue growth of 26% and more than a 200-basis point gross margin improvement in 2017.

We also achieved several key strategic milestones, including gaining Medicare coverage for Omnipod and submitting a 510(K) to the FDA for our next-generation Omnipod DASH system in early 2018.

Looking ahead

Insulet capped off a good year with a solid quarter. Sullivan said, "We are on a strong, sustained growth trajectory and are well on our way to achieving our 2021 targets of $1 billion in revenue, approaching 70% gross margin, and above-market profitability." 

For the first quarter of 2018, the company guided for revenue of $119 million to $123 million, representing year-over-year growth of 17% to 21%. For the full year, it expects revenue of $560 million to $580 million, representing growth of 21% to 25% over 2017.