Insulet Achieves Operating Profitability, but Pares Back 2018 Revenue Guidance

A two-pane panel with upper one showing an Omnipod on a woman's lower stomach and lower one showing the handheld control device.

Insulet (NASDAQ: PODD) reported second-quarter 2018 financial results after the market close on Thursday. The drug delivery company, which is a leader in tubeless insulin pump technology, delivered revenue growth of 13% year over year, while its loss per share narrowed considerably to $0.03, from $0.13.

Insulet's results: The raw numbers

Data source: Insulet.

Revenue fell short of the company's guidance of $130 million to $134 million, which CEO Patrick Sullivan addressed on the earnings call:

CFO Michael Levitz added:

For context, Insulet grew revenue 21% in the first quarter and 26% in 2017. The company doesn't provide earnings guidance. Notably, Insulet turned in positive operating income in the quarter after achieving breakeven from an operating profitability standpoint in the first quarter .

For more context -- though long-term investors shouldn't pay too much attention to Wall Street's near-term estimates -- analysts had been looking for a loss of $0.13 per share on revenue of $132.9 million in the second quarter. So Insulet missed the top-line expectation, but it sailed by the earnings consensus.

What happened with Insulet in the quarter?

  • U.S. Omnipod's revenue jumped 19% from the year-ago quarter to $78.1 million.
  • International Omnipod's revenue increased 7% to $28.5 million. This number is net of the company's repurchase of $7.4 million in inventory from its former European distributor.
  • Drug delivery's revenue edged down 1% to $17.7 million.
  • Gross margin came in at 66%, up 710 basis points (7.1 percentage points) from the year-ago quarter. Gross margin has been making steady solid gains, thanks largely to increased manufacturing and operational efficiencies. In the reported quarter, product mix was also a factor.
  • Insulet began its direct sales operation for Omnipod in Europe on July 1.
  • The company began a "U.S. limited market release of Omnipod DASH, [its] next-generation mobile platform, following FDA clearance in June," according to the press release.
  • It "[s]ecured in-network coverage with UnitedHealthcare for Omnipod, effective April 2018," as well as "Medicare formulary coverage with two Part D plan sponsors," effective the same month, said the press release.

What management had to say

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

Looking ahead

Insulet posted a solid quarter after accounting for the excess inventory situation in Europe.

The company issued its third-quarter outlook as follows: revenue of $144.5 million to $151.5 million, representing growth of 19% to 24% year over year.

Insulet revised downward its previously issued full-year 2018 revenue guidance, due to "the short-term impact of transitioning to direct operations in Europe," as Sullivan noted in his press release statement. The company now expects 2018 revenue in the range of $547 to $562 million, representing growth of 18% to 21% year over year. Its previous guidance was for revenue of $565 to $580 million, which represented growth of 22% to 25% over 2017.

10 stocks we like better than Insulet

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now… and Insulet wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of June 4, 2018

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool recommends Insulet. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.