Leading cardiac assist devices maker,
), reported third-quarter fiscal 2013 adjusted earnings per share
(EPS) of 7 cents (up 16.7% year-over-year), beating the Zacks
Consensus Estimate of 6 cents.
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However, the Massachusetts.-based company registered a profit of
$2.7 million (or 7 cents per share), down roughly 7%. Profit
declined on account of higher expenses, which led to a
contraction in gross margin. However, a share repurchase program
helped to leverage the bottom line in this quarter.
Revenues climbed 19% year over year to $38.3 million, roughly
in-line with the Zacks Consensus Estimate of $38 million. This
marked the 13th straight quarter, in which Abiomed recorded
year-over-year double-digit growth. Growth was led by solid sales
of the Impella heart pumps. Additionally, the company posted
record patient utilization of the Impella device in the quarter.
Globally, Impella sales soared 21% year over year to $33.5
million in the third quarter. U.S. Impella sales grew 22% to
$31.1 million. Abiomed opened 23 new U.S. Impella 2.5 sites in
the quarter to end with a total of 718 customer sites.
Gross margins declined to 78.7% from 80.5% a year ago, reflecting
increased expenses associated with capacity expansion and
manufacturing costs of the new Impella CP device. However,
operating margin was 7.7% compared with 7.0% in the prior-year
Selling, general and administrative expenses were at 54.6% of
sales versus 53.4% in the year-ago quarter. Research and
Development expenses, as a percentage of sales, fell to 16.4%
Abiomed exited the quarter with cash, cash equivalents and
short-term marketable securities of $85.7 million, 23.1% higher
than the previous year. Free cash flow in the quarter amounted to
$7.3 million. The company had no debt.
In an effort to leverage its bottom line, the company repurchased
0.8 million shares in the quarter for $10.7 million as a part of
its repurchase program to buy back up to $15 million of its
The company reiterated its revenue guidance for fiscal 2013.
Abiomed forecasts revenues to grow 23%-24% to $155 - $157
million. Global Impella sales are expected to increase more than
Abiomed had initiated a controlled launch of its Food & Drug
Administration (FDA) approved Impella product, Impella CP
(Cardiac Power), in the U.S. (also known as Impella cVAD outside
the U.S.) in Sep 2012. The device was sold to 34 top hospitals,
ending with a total of 46 customer sites.
Moreover, Abiomed achieved a major milestone by winning the
Investigational Device Exemption (IDE) clearance from the FDA for
the use of Impella RP (Right-side Percutaneous) in a clinical
trial called "Recover Right". The study is intended to gather
information on the safety and efficacy of the Impella RP device.
Results from the study will be used by Abiomed to apply for a
Humanitarian Device Exemption (HDE) approval, for which the
company has already received a HUD (Humanitarian Use Device)
approval on Jul 13, 2012.
In December 2012, the 515i FDA panel recommended a Class III
status for Abiomed's Impella devices and stated that all future
temporary ventricular assist devices will require Post Market
Approval (PMA). Meanwhile, the company will continue to sell its
Impella products under the 510(k) clearance and is working with
the regulatory body to submit the required clinical data under
the PMA application process.
Abiomed is enjoying a strong demand for its Impella products.
Impella utilization continues to grow at a healthy pace, as is
evident from the increasing number of patients being treated with
the device. We are impressed by the company's efforts to achieve
clinical as well as operational excellence.
However, we are wary of negative sentiments amongst investors
regarding the Impella 2.5 investigation process. Moreover, the
company must control its expenses to enhance profitability and
The company has a Zacks Rank #2 (Buy). Other medical stocks such
IDEXX Laboratories, Inc.
Natus Medical Inc.
) with a Zacks Rank #2 (Buy) appear impressive.