) fiscal 2013-first-quarter earnings per share (EPS) of 5 cents
(excluding legal expenses and the medical device excise tax)
missed the Zacks Consensus Estimate by a penny and were lower
than the year-ago earnings of 8 cents.
Including the special items, the Massachussets-based company
registered a loss of $1.7 million or 4 cents per share in the
quarter compared with a profit of $3.1 million or 8 cents in the
Revenues for the first quarter climbed 10% year over year to
$42.7 million, in line with the Zacks Consensus Estimate. This
marked the 15th straight quarter, in which Abiomed recorded
year-over-year double-digit growth. The improvement was led by
solid sales of the Impella heart pumps and patient utilization of
the Impella device in the quarter.
Globally, Impella revenues rose 12% to $38.7 million in the
quarter. U.S. Impella revenues grew 7% to $35.4 million. ABMD
opened 27 new U.S. sites for Impella 2.5 in the quarter to end
with 775 customer sites. Moreover, 66 new hospitals adopted the
latest Impella CP, with 172 customer sites in the U.S.
Gross margin declined 120 basis points (bps) to 79.6% from 80.8%
a year ago. The company's gross margin is sensitive to the number
of console placed for new site openings, expanded use needs and
AIC upgrades. In the quarter under review, 191 Impella consoles
were placed against 163 in the previous year quarter.
Research and Development expenses (R&D) were up 9% to $7.3
million, primarily on account of expenses related to premarket
approval (PMA) submission. Selling, general and administrative
expenses (SG&A) increased 33% to $28 million. The company
generated operating loss of $1.3 million compared to operating
income of $3.6 million in the year-ago quarter.
Abiomed had cash, cash equivalents and short-term marketable
securities of $88.0 million as of Jun 30, 2013, which was roughly
flat when compared with the same as of Mar 31, 2013. The company
had no debt and did not repurchase shares in the quarter.
ABMD reiterated it revenue guidance for fiscal 2014. Management
forecasts revenues to grow 14%-17% to $180-$185 million for the
year. Global Impella sales are expected to increase by 20%.
However, the company lowered its operating margin forecast to the
range of nil to 5% compared with the earlier guidance of
7%-8%. The reduction is mainly due to higher costs related
to legal issues, stock-based compensation expenses, regulatory
submissions and pipeline development.
Abiomed's Impella achieved a landmark in the quarter with the
device being used to treat 15,000 patients in the U.S. Moreover,
positive data from the Protect II Cost Effectiveness Study has
been published in the American Health & Drug Benefits
Journal. Further, the company has received U.S. Food and Drug
Administration (FDA) approval of PMA Shell for Modular Submission
of the Impella 2.5.
Additionally, the U.S. District Court of Massachusetts dismissed
a derivative lawsuit filed in Feb 2013. Moving ahead, in the
international markets, the Netherland government has cleared new
reimbursement coding and payment for the Impella, which allows
medical centers to receive funding for the use of the technology.
Although we are impressed with the bottom-line beat at ABMD,
higher expenses are a cause of concern. The company's engagement
in a number of legal issues is increasing expenses and resulting
in net loss. This has also driven management to lower its
operating margin guidance, which is a risk to the bottom line.
The company must control its expenses to enhance profitability
However, the company enjoys 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.
Abiomed has a Zacks Rank #3 (Hold). Currently, other medical
stocks such as
Mindray Medical International
) are worth considering. All these stocks carry a Zacks Rank #2
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