Please ensure Javascript is enabled for purposes of website accessibility

Abiomed Raises Guidance After Another Strong Quarter

By Brian Feroldi - Updated Apr 25, 2019 at 8:21PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Worldwide demand for temporary heart pumps continues to soar.

Abiomed (ABMD 2.85%), a maker of temporary heart pumps, reported its fiscal third-quarter results on Thursday.

Sales continue to grow at a robust rate thanks to strong demand in both domestic and international markets. Net income grew at a triple-digit rate yet again, but that was mostly a result of easy year-over-year comparisons. 

Abiomed's third quarter: The raw numbers

Metric

Q3 2019

Q3 2018

Year-Over-Year Change

Revenue

$201 million

$154 million

30%

GAAP net income

$44.9 million

$13.4 million

235%

Earnings per share

$0.97

$0.29

234%

Data source: Abiomed.

Doctors shaking hands in hallway

Image source: Getty Images.

What happened with Abiomed this quarter?

  • Domestic sales of Impella grew 27% to $166 million. International sales jumped 59% to $17.3 million, primarily thanks to strength in Germany and Japan.
  • Impella 2.5 and CP are now available at roughly 1,300 sites in the U.S., the Impella 5.0 is available at 578 sites, and Impella RP is now at roughly 400 sites in total.
  • Reorder rate remained slightly above 100%.
  • 13 new sites were opened in Japan during the quarter, bringing the total to 48 hospitals in Japan now offering Impella to patients. 
  • Gross margin declined 80 basis points to 83%, attributable to mix and "manufacturing investments."
  • Operating margin expanded 200 basis points to 31.1%. 
  • The triple-digit growth in net income is largely a result of the $22 million one-time tax bill included in the results in the year-ago period. On a normalized basis, EPS growth would have been 26%.
  • Cash balance at quarter end grew to $458.2 million. The company remains debt free.
  • Abiomed won regulatory clearance in Europe for its Impella Connect product, which enables remote viewing of the Impella console in the cloud. 

What management had to say

CEO Michael Minogue commented that the company recently celebrated an important patient milestone:

We are proud of our 100,000th patient milestone and we will continue to grow the field of heart recovery and improve patient outcomes by partnering with our customers to use real-world data to identify and validate best practices and protocols. We remain focused on disciplined execution and sustainable growth so that even more patients around the world can benefit from heart recovery.

CFO Todd Trapp credited Abiomed's strong revenue growth to "solid performance across all geographies" and noted that this was the company's 17th consecutive quarter of greater than 25% revenue growth. Trapp also touched on the various investments that are being made across the business to drive future growth:

We're investing in new products and enhancements like SmartAssist, Impella Connect, Impella 5.5 and Impella ECP. We're focused on clinical research and potential new indications like STEMI. We've expanded our manufacturing capacity in both Danvers and Aachen to support future demand and we also continue to add to our industry-leading commercial team and provide education and 24/7 hospitals support, all with a focus on improving patient outcomes.

Looking forward

The strong growth allowed management to boost its full-year fiscal 2019 guidance again. The company now expects revenue to be about $780 million, up from its prior range of $765 million to $770 million. This full-year sales guidance implies that fiscal fourth-quarter revenue will be about $280 million, which represents 25% growth.

The increased sales leverage for the year is expected to drive a higher operating margin, too. The company is now guiding for fiscal year 2019 operating margin to land between 29% to 29.5% This is a smidge higher than the midpoint of its prior guidance. 

Check out the latest Abiomed earnings call transcript.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

ABIOMED, Inc. Stock Quote
ABIOMED, Inc.
ABMD
$254.56 (2.85%) $7.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.