Danvers, MA-based Abiomed Inc. ABMD, a leading developer, manufacturer and marketer of medical products, reported fourth-quarter fiscal 2017 earnings of 33 cents per share, which were in line with the Zacks Consensus Estimate. The figure also surged 37.5% from the year-ago quarter.
Revenues increased roughly 33% year over year to almost $125 million, outpacing the Zacks Consensus Estimate of $122 million. The year-over-year upside was supported by robust performance of the Impella heart pump product line.
For fiscal 2017, total revenue was $445.3 million, compared with $329.5 million in fiscal 2016 (up 35%).
ABIOMED, Inc. Price, Consensus and EPS Surprise
ABIOMED, Inc. Price, Consensus and EPS Surprise | ABIOMED, Inc. Quote
Abiomed has had an impressive run on the bourse over the last three months. The company gained 22.3%, higher than the Zacks categorized Medical instruments sub-industry’s addition of almost 10.1%. The stock promises a long-term adjusted earnings growth of 28%.
Abiomed has a Zacks Rank #3 (Hold).
Quarter Highlights
Of the major highlights, Abiomed has been gaining prominence of late, courtesy of a plethora of regulatory approvals in the fourth quarter. Abiomed received FDA PMA approval for cardiogenic shock, Impella CP approval for high-risk PCI, IDE approval for STEMI Door to Unloading study and more.
The company strengthened its distribution base in the U.S. and Germany and increased manufacturing and training capacity in Aachen, Dnvers and Massachusetts to meet demand.
The company also declared the successful launch of the Abiomed Impella Quality Program in the quarter to improve clinical outcomes.
Quarter in Details
Globally, Impella heart pump revenues grew a strong 34% to $118.9 million in the quarter. Full-year worldwide Impella revenues totaled $423.7 million, up 37% on a year-over-year basis.
U.S. Impella revenues improved 32% to $108.2 million (driven by a 30% increase in patient utilization) while outside the U.S., revenues shot up 58% to $10.7 million. Germany accounted for the majority of the international revenues, which grew 63% on a year-over-year basis.
During the reported quarter, the installed base for Impella 2.5 heart pumps in the U.S. grew by 19 hospitals, taking the installed customer base total to 1,138 sites. The installed customer base for Impella CP heart pumps grew by 44 U.S. hospitals, reaching the total to 1016.
Overall operating income for the reported quarter came in at $29 million or 23.3% of operating margin (as a percentage of revenues), compared with $19.8 million or 21.1% in the prior-year quarter.
Gross margin in the fourth quarter was 84.6%, compared with 84.4% in the fourth quarter of fiscal 2016.
Financial Condition
Cash and cash equivalents were $18.2 million at fourth-quarter end, totaling $277 million as of Mar 31, 2017. Notably, management announced that the company currently has no debt.
Guidance
Abiomed issued guidance for fiscal 2018.
The company forecasts fiscal 2018 revenues in the range of $440 million to $445 million. This marks an increase of 25–29% from the fiscal 2016 level.
Operating margin is projected in the band of 22% to 24%.
Our Take
Abiomed posted a promising fourth quarter of fiscal 2017, with revenues beating the Zacks Consensus Estimate and earnings meeting the mark.
We believe that robust demand for the Impella product line will continue to drive Abiomed’s top line over the long term. The company’s expanding product portfolio will improve its penetration into both the prophylactic high-risk PCI and cardiogenic shock patient market going forward. This is evident from the fact that both Impella 2.5 and CP continue to add centers in the U.S. New publications regarding the devices in leading medical journals help in promoting their utilization and effectiveness.
Although Abiomed’s significant international presence helps broaden its customer base among other positives, fluctuations in currency exchange rates can adversely impact the company’s international sales.
Key Picks
Better-ranked stocks in the broader medical sector include Neovasc Inc. NVCN, Hologic, Inc. HOLX and Sunshine Heart Inc SSH. Notably, Neovasc and Hologic sport a Zacks Rank #1 (Strong Buy), while Sunshine Heart has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 32.9%.
Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock recorded a stellar EPS growth rate (last 3–5 years of actual earnings) of almost 22%.
Neovasc had a solid return of 10.3% over the last three months.
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