Shares of the Massachusetts-based maker of minimally invasive heart pumps are down 41.7% in 2019 through Sept. 6. The healthcare stock remains a big winner, however, over periods longer than three years.
For context, the S&P 500, including dividends, fell 1.6% last month and is up 20.5% so far this year.
We can attribute Abiomed stock's poor August performance to the company's Aug. 1 release of fiscal first-quarter 2020 results that fell short of Wall Street's revenue estimate along with management lowering its full-year guidance. The latter was probably the bigger factor since the market is a forward-looking machine. Shares plunged 26.5% following the release.
In fiscal Q1, Abiomed's revenue grew 15% year over year to $207.7 million, missing the $210.7 million analysts had expected. We can blame the miss on U.S. Impella sales growing just 11% year over year to $151.7 million, which includes a 20% sequential drop in sales of the Impella RP. This device was the subject of a confusing February letter sent by the Food and Drug Administration to healthcare providers, as my colleague Brian Feroldi wrote at the time. In May, the FDA issued an update saying that the Impella RP was safe and effective, but it appears that not all providers received that information and/or there is still some confusion in the market about the topic.
Net income based on generally accepted accounting principles (GAAP) edged down 1% to $88.9 million, or $1.93 per share. This included a $0.65-per-share unrealized gain from the company's investment in ShockWave Medical (NASDAQ:SWAV) and a $0.28-per-share tax benefit related to employee share-based compensation. Excluding these items, adjusted earnings per share (EPS) came in at $1, up 28% from the year-ago period, and higher than the $0.97 consensus estimate.
CEO Michael Minogue said in the earnings release that the company is addressing the issues negatively affecting growth: "In Q1, we implemented new training programs, organizational changes in distribution, and launched external initiatives that will require time to drive more growth in the future. We are confident in our ultimate global adoption because we know that our innovation improves clinical outcomes and patient quality of life."
Abiomed's management lowered its outlook for full-year fiscal 2020 revenue and operating margin. Revenue is now expected to come in between $885 million and $925 million, which represents growth of 15% to 20% year over year. The prior revenue guidance was $900 million to $945 million. GAAP operating margin is now forecast to be in the range of 28% to 30%, down slightly from the previous guidance of 29% to 31%.