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Insulet (PODD) Q1 Earnings Beat Estimates, Sales View Up

Insulet Corporation PODD reported adjusted earnings of 23 cents per share for first-quarter 2023, down 42.5% from the year-ago period’s reported earnings of 40 cents.

First-quarter 2023 adjusted earnings however exceeded the Zacks Consensus Estimate for adjusted earnings by 155.6%.

The quarter’s adjustment excludes a charge of $8 million associated with a voluntary medical device correction notice issued to replace the Omnipod DASH Personal Diabetes Managers.

GAAP EPS was 34 cents compared with 40 cents per share in the year-ago period.

Revenues

Revenues in the first quarter totaled $358.1 million, beating the Zacks Consensus Estimate by 8.5%. Moreover, the top line jumped 21.2% from the year-ago quarter’s number (up 23.3% at the constant exchange rate or CER). Quarterly revenues exceeded the company’s previous growth expectations of 11-14% at CER.

Segment in Detail

Insulet’s Total Omnipod revenues of $357.6 million reflected an increase of 32.7% year over year (up 34.9% at CER). International Omnipod revenues of $98.6 million rose 3.4% (up 9.6% at CER). U.S. Omnipod revenues grew 48.8% year over year to $259 million.

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The Drug Delivery business revenues totaled $0.5 million, down 98.1% year over year.

Margins

Gross profit in the reported quarter was $241.5 million, up 14.7% from the prior-year quarter. Gross margin of 67.2% contracted a significant 383 basis points.

Selling, general & administrative expenses rose 26.4% to $162.7 million. Research and development expenses rose 16.2% year over year to $50.1 million.

The operating margin contracted 509 basis points to 7.7%.

Insulet Corporation Price, Consensus and EPS Surprise

Insulet Corporation Price, Consensus and EPS Surprise
Insulet Corporation Price, Consensus and EPS Surprise

Insulet Corporation price-consensus-eps-surprise-chart | Insulet Corporation Quote

Cash Position

Insulet exited the first quarter of 2023 with cash and cash equivalents of $620.7 million, compared with $674.7 million at the end of 2022.

2023 Guidance

Insulet has updated its guidance for 2023.

For 2023, the company has raised its revenue growth guidance to the range to 18-22%(from the earlier band of 14-19%). The Zacks Consensus Estimate for total revenues is pegged at $1.52 billion.

Insulet’s Total Omnipod revenue growth is now expected in the range of 21-25% (17-22%). The company reaffirmed its expectation of Drug Delivery revenues to fall in the range of 45-55%.

For the second quarter of 2023, Insulet projects revenue growth of 27-30%. The Zacks Consensus Estimate for total revenues is pegged at $361.1 million.

Total Omnipod revenues are likely to grow 29-32%. However, Drug Delivery revenues are expected to fall in the range of 20-25%.

Our Take

Insulet exited the first quarter of 2023 with better-than-expected earnings and revenues. The company’s performance benefited from record first-quarter U.S. revenue growth of 49% and total Omnipod growth of 35%. The company delivered a record first quarter in terms of United States and global new customer starts. Omnipod 5 continued to be a driving force of Insulet’s strong U.S. growth and in the first quarter, representing almost 95% of the company’s U.S. new customer starts.

However, the substantial fall in Drug Delivery sales is discouraging. Contraction in margins does not bode well. On a year-over-year basis, the company expects gross margin to be impacted by higher costs associated with the U.S. manufacturing ramp, product line mix due to the ramp-up of Omnipod 5 and lower drug delivery revenues. Supply chain disruptions and inflationary pressures continue to challenge business operations.

Zacks Rank and Other Key Picks

Insulet currently carries Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation EW, Intuitive Surgical, Inc. ISRG and Johnson & Johnson JNJ.

Edwards Lifesciences, carrying a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and came in line in the other, the average being 1.2%.

Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.

Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.

Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.

Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.

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Johnson & Johnson (JNJ) : Free Stock Analysis Report

Intuitive Surgical, Inc. (ISRG) : Free Stock Analysis Report

Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report

Insulet Corporation (PODD) : Free Stock Analysis Report

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