Insulet (NASDAQ:PODD) reported strong third-quarter 2019 results after the market closed on Tuesday, Nov. 5. The tubeless insulin pump specialist's revenue grew 27% and its adjusted earnings per share surged 200% year over year.

Shares of the Massachusetts-based healthcare company jumped 3.3% in after-hours trading on Tuesday. We can attribute the market's initial reaction to both revenue and adjusted earnings surpassing Wall Street's consensus estimates, along with management increasing its full-year 2019 revenue guidance. In 2019, shares have gained 86.6% through Tuesday's regular trading session, versus the S&P 500's 24.8% return.

(Insulet stock is one of just three stocks highlighted in last month's "3 Stocks Poised for Huge Growth Over the Next Decade.")

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.

Insulet's key numbers

Metric

Q3 2019

Q3 2018

Change (YOY)

Revenue

$192.1 million $151.1 million 27%

Operating income

$17.0 million $6.9 million 146%

Net income

$0.9 million $1.7 million (47%)

Earnings per share (EPS)

$0.01 $0.03 (67%)

Adjusted EPS

$0.09 $0.03 200%

Data source: Insulet. YOY= year over year.

Adjusted earnings exclude the impact of a one-time, non-cash charge of $6.5 million relating to the extinguishment of 65% of the company's 2021 convertible notes. 

Revenue breezed by Insulet's guidance range of $174 million to $181 million. For context, in the first and second quarters, revenue grew 43% and 29%, respectively, year over year.

Wall Street was looking for adjusted EPS of $0.03 on revenue of $179.5 million. So the company beat expectations on both the top and bottom lines.

What happened with Insulet in the quarter? 

  • Global Omnipod revenue surged 34% year over year to $177.2 million.
  • U.S. Omnipod revenue jumped 34% to $109.5 million.
  • International Omnipod revenue rose 35% to $67.7 million. 
  • Drug delivery revenue fell 21% to $14.9 million.
  • Gross margin was 64.1%, down from 67.5% in the year-ago period, and in-line with the company's expectations. The decline was due to the ramp-up of the company's manufacturing capabilities at its new U.S. facility, located in Massachusetts. 
  • Insulet is installing its second "highly automated" manufacturing line at the above noted facility, with production on this line expected to begin in mid-2020, CEO Shacey Petrovic said on the earnings call.
  • The company remains on track to launch its Horizon automated insulin delivery system in late 2020. The system uses a DexCom continuous glucose monitor to dose insulin. 

What management had to say

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

Building on our outstanding growth and progress, we again delivered strong financial and operational results. Consistent execution of our strategic imperatives combined with Insulet's strong foundation will fuel our continued growth. We are raising our outlook for the full year 2019 and will continue to drive growth and value creation over the long term. Our team is focused on delivering life-changing innovation to people living with diabetes around the world.

Looking ahead

Insulet posted yet another robust quarter. Management issued fourth-quarter revenue guidance and, once again, raised its full-year 2019 revenue outlook:

  • Q4: Revenue of $193 million to $201 million, representing growth of 17% to 22% year over year. 
  • 2019: Revenue of $722 to $730 million, representing growth of 28% to 29%. This compares to guidance released last quarter for revenue growth of 24% to 27%, which, in turn was a raise from the prior outlook of revenue growth of 18% to 22%.

Going into earnings, Wall Street had been modeling for Q4 revenue of $194.8 million and 2019 revenue of $711.5 million. The stronger-than-expected outlook was surely a factor in the stock's rise in Tuesday's after-hours trading session.