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Insulet (PODD) Q3 Earnings Beat Estimates, '22 Sales View Up

Insulet Corporation PODD reported adjusted earnings of 45 cents per share for third-quarter 2022, reflecting a 125% surge from the year-ago period earnings of 20 cents per share.

Third-quarter 2022 earnings exceeded the Zacks Consensus Estimate for adjusted earnings by 164.7%.

The quarter’s adjustment excludes a charge of $36.8 million associated with a voluntary medical device correction notice issued on Oct 17 to replace the Omnipod DASH Personal Diabetes Managers.

GAAP loss per share was 8 cents against earnings of 18 cents per share in the year-ago period.

Revenues

Revenues in the third quarter totaled $340.8 million, beating the Zacks Consensus Estimate by 9.3%. Moreover, the top line jumped 23.7% from the year-ago number (up 28.5% at the constant exchange rate or CER). Quarterly revenues exceeded the company’s previous growth expectations of 17-20% at CER.

Segment in Detail

Insulet’s Total Omnipod revenues of $326.1 million reflected an increase of 25.3% year over year (up 30.5% at CER). International Omnipod revenues of $88 million fell 5.5% (up 8.9% at CER). U.S. Omnipod revenues grew 42.4% year over year to $238.1 million.

The Drug Delivery business revenues totaled $14.7 million, down 3.9% year over year.

Margins

Gross profit in the reported quarter was $188.3 million, down 0.2% from the prior-year quarter. Gross margin of 55.3% contracted 132 basis points.

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

Meanwhile, selling, general & administrative expenses rose 19.5% to $140.4 million. Research and development expenses rose 20% year over year to $45 million.

The operating margin contracted a significant 1138 basis points to 0.9%.

Cash Position

Insulet exited the third quarter of 2022 with cash and cash equivalents of $722 million, compared with $708.6 million at the end of the second quarter of 2022.

2022 Guidance

Insulet has updated its guidance for full-year 2022. The company has also provided a financial outlook for fourth-quarter 2022.

For 2022, the company raised its revenue growth expectation to the range of 18-19% at CER (the prior projection was in the band of 14-17% at CER). The Zacks Consensus Estimate for total revenues is pegged at $1.27 billion.

Insulet’s Total Omnipod revenue growth is now expected in the range of 23-24% at CER (compared with the previously estimated range of 18-21% at CER). The company currently expects Drug Delivery revenues to fall in the range of 35-37% at CER (compared with the previously estimated range of 35-40% decline at CER).

For the fourth quarter of 2022, Insulet projects revenue growth of 11-14% at CER. The Zacks Consensus Estimate for total revenues is pegged at $332.5 million.

Total Omnipod revenues are likely to grow 23-26% at CER. However, Drug Delivery revenues are expected to fall in the range of 92-100% at CER.

Our Take

Insulet exited the third quarter of 2022 with better-than-expected earnings and revenues. The company’s performance benefited from record quarterly U.S. and Total Omnipod new customer starts. This helped Insulet to achieve 42% year-over-year growth in the United States, the highest in a decade. This was driven mainly by a strong start to the company’s U.S. full market release of the Omnipod 5 automated insulin delivery system.The raised sales guidance for 2022 is indicative of the continuation of this growth momentum.

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. These headwinds will be partially offset by the benefit of increasing volume in the U.S. pharmacy channel.

Supply chain disruptions and inflationary pressures continue to challenge business operations.

Zacks Rank & Key Picks

Insulet currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are AMN Healthcare Services, Inc. AMN, Medpace Holdings, Inc. MEDP and Merit Medical Systems, Inc. MMSI.

AMN Healthcare, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $2.57, which beat the Zacks Consensus Estimate by 10.3%. Revenues of $1.14 billion outpaced the consensus mark by 3.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has an estimated long-term growth rate of 3.2%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average being 10.9%.

Medpace Holdings, sporting a Zacks Rank #1, reported third-quarter 2022 EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $383.7 million outpaced the consensus mark by 8.1%.

Medpace Holdings has an estimated growth rate of 44.9% for the full-year 2022. MEDP’s earnings surpassed estimates in all the trailing four quarters, the average being 22%.

Merit Medical, carrying a Zacks Rank #2, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.

Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.


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