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Insulet Kicks Off 2019 With a Strong Quarter; Stock Soars 12%

By Beth McKenna – May 4, 2019 at 3:00PM

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In the first quarter, the tubeless insulin pump specialist's revenue growth accelerated and it raised its full-year 2019 guidance.

Insulet (PODD 0.33%) reported first-quarter 2019 results after the market close on Thursday. The leader in tubeless insulin pump technology delivered revenue growth of 29% year over year and earnings flipped to positive, from negative in the year-ago period

The reported quarter marked only the third time that Insulet has posted positive quarterly earnings, following the third and fourth quarters of 2018. Last year was also the first year that Insulet achieved full-year positive operating income and net income.

Shares soared to a closing gain of 12.3% on Friday. We can attribute the market's reaction to both revenue and earnings coming in higher than many investors were likely expecting and to the company increasing its full-year 2019 guidance. In 2019, shares have gained 21.8% through Friday, versus the S&P 500's 18.3% return.

Insulet's results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Change

Revenue

$159.6 million

$123.6 million

29%

Operating income

$7.3 million

--

100%

Net income

$4.4 million

($6.6 million)

N/A

Earnings per share (EPS)

$0.07 ($0.11) N/A

Data source: Insulet. 

Revenue came in above the company's guidance range of $152 million to $156 million. For context, in 2018, revenue jumped 22% year over year. Breaking that down by quarter, revenue rose 21% in the first quarter, 12% in the second quarter, 24% in the third quarter, and 26% in the fourth quarter. (The second quarter's relatively light growth was due to 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 $0.01 on revenue of $154.7 million. So, as it did last quarter, 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: Insulet.

What happened with Insulet in the quarter? 

  • U.S. Omnipod's revenue jumped 23% year over year to $86.1 million.
  • International Omnipod's revenue soared 48% to $56.9 million. 
  • Drug delivery's revenue rose 11% to $16.6 million.
  • Gross margin came in at 66.9%, up 550 basis points (5.5 percentage points) from the year-ago quarter and flat with the previous quarter. The year-over-year increase is due to increasing manufacturing and operational efficiencies. 

What management had to say

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

Building on our outstanding performance in 2018, Insulet delivered strong financial results for the first quarter, including robust revenue growth, margin expansion and continued profitability. We are making great progress on many fronts, including the start-up of our highly automated U.S. manufacturing, our Omnipod DASH full U.S. market release, and the corresponding shift to the pay-as-you-go model. We are particularly proud to have advanced all of these initiatives while driving first quarter revenue growth of 29%.

Petrovic, formerly the company's COO, succeeded Patrick Sullivan, who retired on Jan. 1. 

Looking ahead

Insulet kicked off 2019 with a strong quarter. The company issued second-quarter guidance and raised its full-year 2019 outlook as follows:

  • Second quarter: Revenue in the range of $160 million to $165 million, representing growth of 29% to 33% year over year.
  • Full year: Revenue in the range of $667 million to $690 million, representing growth of 18% to 22% over 2018. This compares to previous guidance of $662 million to $687 million.

Petrovic said in the earnings release that the company is "well on our way to delivering our 2021 financial targets of $1 billion in revenue, 70% gross margin and mid-teens operating margin."

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends Insulet. The Motley Fool has a disclosure policy.

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