Insulet (NASDAQ:PODD) reported fourth-quarter and full-year 2018 results after the market close on Monday. For the quarter, the leader in tubeless insulin pump technology delivered revenue growth of 26% year over year and earnings flipped to positive, from negative in the year-ago period. 

The fourth quarter marked only the second time that Insulet has posted positive quarterly earnings, with last quarter being the first.

Shares edged down 1.4% in after-hours trading on Monday. We can probably attribute the decline to 2019 revenue guidance coming in lower than what Wall Street was expecting. Shares have gained 19% over the one-year period through Monday's regular trading session, versus the S&P 500's 3.8% return.

Insulet's results: The raw numbers

Metric

Q4 2018

Q4 2017

Year-Over-Year Change

Revenue

$164.9 million

$130.5 million

26%

Operating income

$16.2 million

($0.8 million)

N/A

Net income

$9.9 million

($6.9 million)

N/A

Earnings per share (EPS)

$0.16 ($0.12) N/A

Data source: Insulet. 

For full-year 2018, revenue jumped 22% year over year to $563.8 million. Net income was $3.3 million, or $0.05 per share, compared to a net loss of $26.8 million, or $0.46 per share, in 2017. This year was the first time Insulet achieved full-year positive operating income and net income.

For the fourth quarter, revenue came in above the company's guidance range of $159 million to $164 million. For context, revenue growth was 24% year over year in the third quarter, 12% in the second quarter, and 21% in the first quarter. The second quarter's downturn stemmed from excess inventory in Europe when Insulet transitioned to a direct sales operation for international Ommipod.

For more context -- though long-term investors shouldn't pay too much attention to Wall Street's near-term estimates -- analysts had been looking for EPS of $0.07 on revenue of $162.5 million. So Insulet sailed by expectations for both the top and bottom lines. 

A two-pane panel with upper one showing an Omnipod on a woman's stomach and lower one showing the handheld control device.

Image source: Getty Images.

What happened with Insulet in the quarter? 

  • U.S. Omnipod's revenue jumped 22% from the year-ago quarter to $93.2 million.
  • International Omnipod's revenue soared 54% to $55 million. 
  • Drug delivery's revenue declined 8% to $16.7 million.
  • Gross margin came in at 66.9%, up 600 basis points (6 percentage points) from the year-ago quarter. This metric made big gains throughout 2018, driven by increasing manufacturing and operational efficiencies. 

What management had to say

Here's what CEO Shacey Petrovic said in the press release: 

Insulet had a remarkable 2018, achieving our third consecutive year of over 20% revenue growth, significantly improving gross margin, and achieving profitability for the first year in the Company's history. Our fourth quarter and full year results were driven by strong commercial and operational execution and gives us great momentum, ensuring more people with diabetes can benefit from our life-changing technology.

Insulet has multiple value creation catalysts ahead and we are well on our way to achieving our 2021 financial targets of $1 billion in revenue, 70% gross margin and mid-teens operating margin. We have ambitious plans for Insulet and we are confident we will continue our strong growth trajectory and create value for shareholders.

Petrovic, formerly the company's COO, took the CEO reins from Patrick Sullivan, who retired on Jan. 1. 

Looking ahead

Insulet capped off a great year with a strong quarter. The company issued first-quarter and full-year 2019 guidance as follows:

  • First quarter: Revenue in the range of $152 to $156 million, representing growth of about 23% to 27% year over year.
  • Full year: Revenue in the range of $662 million to $687 million, representing growth of about 17% to 22% year over year.

Going into the earnings release, Wall Street analysts had been looking for revenue of $156 million in the first quarter and $691.7 million for the full year.