Abiomed (ABMD) beat expectations in the third-quarter fiscal 2011, raised its revenue outlook for the full year and the stock jumped following the earnings release. The company’s third quarter adjusted (excluding one-time items) net loss per share of 1 cent was considerably lower than the Zacks Consensus Estimate of a loss of 9 cents and the year-ago loss of 11 cents.
Net loss (as reported) pared down a staggering 82% year over year to $0.8 million (or 2 cents per share) on the heels of solid performance of the company’s popular Impella cardiac pumps.
The forecast-beating results coupled with an upbeat sales outlook pushed up the Massachusetts-based cardiac assist devices maker’s shares which surged roughly 24% to $12.59 in early trading, touching a new 52-week high on February 3. The company’s shares took a hit in December 2010 after its major Impella study (“PROTECT II”) failed to meet the primary end-point.
Revenues propped up 19% year over year to $27.2 million, beating the Zacks Consensus Estimate of $25 million, boosted by higher sales for Impella systems (including Impella 2.5 and 5.0). The Impella pumps are used for support of acute pre-shock patients or for prophylactic support of patients undergoing high-risk percutaneous coronary intervention.
Worldwide Impella revenues clambered by a third year over year to $21.1 million driven by strong increase in its utilization. Impella systems continue to enjoy strong traction with roughly 752 commercial patients in the U.S. treated with these devices during the quarter, representing an annualized growth of 77%.
Impella reorders in the U.S. skyrocketed 106% year over year to $16.9 million. Abiomed opened 29 new U.S. Impella 2.5 sites in the quarter compared to 66 new sites in the prior year.
The company’s legacy non-Impella franchise continues to struggle with revenues sliding 12% to $6.1 million. Strong revenues drove gross margin expansion in the quarter which rose to 80% from 75% a year-ago.
Balance Sheet
Abiomed exited the third quarter with cash, cash equivalents and short-term marketable securities of $59.2 million, up 14.5% year over year, with no debt. The company generated $5 million in cash during the quarter.
Outlook
Based on healthy third quarter results and healthy Impella demand trend, Abiomed has once again raised its revenue guidance for fiscal 2011. The company now expects total revenue for the year in the range of $99 million to $101 million, up from the earlier forecast of $93 million to $97 million. This compares favorably with the current Zacks Consensus Estimate of $95 million.
Abiomed specializes in medical products designed to assist or replace the pumping function of a failing heart. The company has a broad portfolio of products that are life-sustaining in nature. Abiomed’s strategy focuses on heart recovery as the goal for all acute cardiac attacks. Its products are designed to enable the heart to rest, heal and recover.
Utilization of Impella cardiac pumps continues to grow at a healthy pace as manifested by the increasing number of patients being treated with the device. However, Abiomed still remains a loss-making entity and operates in an intensely competitive environment and faces significant reimbursement risk.
Moreover, competition among providers of treatments for the failing heart is intense and subject to rapid technological changes and evolving industry requirements and standards. Abiomed faces competition from organizations developing permanent heart assist products including Thoratec Corporation (THOR). Currently, we have a Neutral recommendation on the stock, which is supported by a short-term Zacks #3 Rank (Hold).
ABIOMED INC (ABMD): Free Stock Analysis Report
THORATEC CORP (THOR): Free Stock Analysis Report
Zacks Investment Research
