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Insulet's Revenue Surges; Stock Soars 21%

By Beth McKenna – Updated Aug 7, 2019 at 8:17AM

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In the second quarter, the diabetes management specialist's earnings flipped to positive and it raised its full-year 2019 revenue guidance.

Insulet (PODD 1.56%) reported strong second-quarter 2019 results after the market close on Monday, Aug. 5. The tubeless insulin pump specialist delivered revenue growth of 43% year over year and its earnings flipped to positive, from negative in the year-ago period. 

The company turned profitable in the third quarter of last year and has posted a profit in each of the three quarters since then.

Shares soared to a closing gain of 21.4% on Tuesday. We can attribute the market's reaction to revenue coming in higher than many investors were likely expecting and to the company, once again, increasing its full-year 2019 revenue guidance -- and by a hefty amount. In 2019, shares have gained 80.5% through Tuesday, versus the S&P 500's 16.3% return.

Insulet's results: The raw numbers

Metric

Q2 2019

Q2 2018

Change

Revenue

$177.1 million

$124.3 million

43%

Operating income

$7.6 million $4.3 million 77%

Net income

$1.4 million

($1.7 million)

N/A

Earnings per share (EPS)

$0.02 ($0.03) N/A

Data source: Insulet. 

Revenue sailed by the company's guidance range of $160 million to $165 million. For context, in the first quarter, revenue grew 29% year over year, and in 2018, it rose 22%.

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 $0.02 on revenue of about $164 million. So, Insulet easily beat the top-line expectation and came in on target on the bottom line. 

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? 

  • Global Omnipod revenue surged 51% year over year to $160.8 million.
  • U.S. Omnipod revenue jumped 26% to $98.1 million.
  • International Omnipod revenue rocketed 120% to $62.7 million. 
  • Drug delivery's revenue fell 8% to $16.3 million.
  • Gross margin came in at 65.7%, down a slight 30 basis points (0.3 percentage points) from the year-ago quarter. The decline was due to the initial ramp-up of the company's first automated manufacturing line at its new Massachusetts facility. 
  • "More than a third of our new Omnipod customers received DASH" units, CEO Shacey Petrovic said on the earnings call. DASH, Insulet's newest generation platform, was fully commercially launched in the United States last quarter.
  • The company continued to obtain expanded DASH coverage for Medicare and Medicaid patients. By the end of the second quarter, more than 50% of all Medicare patients were covered, up from just over one-third at the end of last quarter, and about 60% of all Medicaid patients were covered, up from over 50% at the end of the first quarter, Petrovic said on the call. 

What management had to say

Here's what Petrovic had to say in the press release:

We had another strong quarter, as we made excellent progress on our strategic imperatives and delivered continued growth, profitability and financial outperformance. We are investing in innovation in our product portfolio, automated manufacturing, and business model to ensure our customers get improved access to our life-changing technologies across the globe. Our consistently strong financial results give us confidence that we are executing the right strategy to drive strong, sustainable growth over the long term. We are raising our outlook for full year 2019 and remain on track to meet our 2021 financial targets. We are taking important steps to unlock Insulet's enormous potential and are excited to continue delivering superior growth and returns for investors.

The 2021 financial targets that she referenced include $1 billion in revenue, 70% gross margin, and mid-teens operating margin.

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

Looking ahead

Insulet posted yet another robust quarter. Management issued third-quarter guidance and, as it did last quarter, raised its full-year 2019 outlook as follows:

  • Third quarter: Revenue in the range of $174 million to $181 million, representing growth of 15% to 20% year over year.
  • Full year: Revenue in the range of $700 million to $715 million, representing growth of 24% to 27% over 2018. This compares to previous guidance of $667 million to $690 million, or growth of 18% to 22%.

Further on the horizon, Insulet plans to launch its Horizon system in late 2020. This is an automated insulin delivery system, which uses a DexCom continuous glucose monitor to dose insulin. 

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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